A Note on an Alternative Approach to Experimental Design of Lottery Prospects

Kelvin Balcombe and Iain Fraser

MPRA Paper from University Library of Munich, Germany

Abstract: e introduce an alternative approach to lottery prospects experimental design aimed at collecting experimental data for parametric estimation of the cumulative form of Prospect Theory (PT). Our approach incorporates two fundamental principles: ensuring that all tasks provide valuable information and avoiding redundancy among tasks. These principles mean that we avoid the construction of lottery prospects that duplicate information within the set of tasks generated. The methodological approach that we have designed ensures that each lottery pair is non-redundant in an informational sense. This means that the set of lottery tasks generated can help to improve the effectiveness of data collection when estimation of preference parameters is the main research objective. In this note, we describe our approach to experimental design in detail.

Keywords: Experimental Design; Lotteries; Risk and Uncertainty; Prospect Theory. (search for similar items in EconPapers)
JEL-codes: C52 C90 D81 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-des, nep-exp and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:119743

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