Debiasing the Becker – DeGroot – Marschak valuation mechanism

This experiment finds that the Becker-DeGroot-Marschak (BDM) (1964) valuation mechanism under-predicts the proportion of subjects choosing cash over an item. The extent of the divergence is increasing in risk aversion, which is consistent with reference dependent preferences. This suggests a reframing of the BDM to improve its performance. The modified BDM mechanism is found to better match choices at a single offer price (SOP).

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Year of publication:	2013-06-14
Authors:	Meza, David de ; Reyniers, Diane
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 33.2013, 2, p. 1446-1456
Publisher:	AccessEcon
Subject:	BDM mechanism \| bias

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Extent:	application/pdf
Type of publication:	Article
Classification:	C9 - Design of Experiments ; D8 - Information and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010667711