Peter Wakker
(Erasmus University)
Prince: An Improved Method for Implementing Real Incentives
(Joint with Cathleen Johnson, Aurélien Baillon, Han Bleichrodt, Zhihua Li & Dennie van Dolder)
We introduce the prior incentive system (Prince) for measuring preferences. Prince makes the decision relevance and incentive compatibility of experimental choice questions clearer to subjects than was possible before. It combines the efficiency and precision of matching with an improved clarity and validity of choice questions. It helps distinguish between (a)
genuine deviations from classical economic theories (such as the endowment effect) and (b) preference anomalies due to
fallible measurements (such as preference reversals). Prince avoids (a) The opaqueness of the Becker-DeGroot-Marschak
mechanism; (b) violations of isolation of the random incentive system; and (c) strategic behavior for adaptive experiments.
Using Prince we shed new light on willingness to accept, subjective probabilities and utilities, and ambiguity attitudes. Not
only did we avoid any deception of subjects, but, moreover, every subject could verify so during the experiment.
Tuesday 30th September 2014, 2.30 p.m.— 3.50 p.m.
Library, 3rd Floor Extension, Wolfson Research Exchange Area,
Seminar Room 1
Join us for light refreshments (coffee/tea and biscuits) before the Forum at 2.15 p.m.
This event is free and open to public: go.warwick.ac.uk/draw