Asymmetrically dominated alternatives and random incentive mechanisms

Ulrich Schmidt

No 1646, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: This note presents an experimental study of the random lottery incentive mechanism. In the baseline treatment we observe risk behavior in a given choice problem. We show that by integrating a second, asymmetrically dominated choice problem in a random incentive mechanism risk behavior can be manipulated systematically. This implies that the isolation hypothesis is violated the random incentive mechanism does not elicit true preferences.

Keywords: Random incentive mechanism; isolation; asymmetrically dominated alternatives (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1646

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