Experimental Elicitation of Ambiguity Attitude using the Random Incentive System

We demonstrate how the standard usage of the random incentive system in ambiguity experiments is not incentive compatible if the decision maker is ambiguity averse. We propose a slight modification of the procedure in which the randomization takes place before decisions are made and the state is realized and prove that if subjects evaluate the experimental environment in that way (first - risk, second - uncertainty), incentive compatibility may be restored.

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Year of publication:	2014-06-15
Authors:	Baillon, Aurelien ; Halevy, Yoram ; Li, Chen
Institutions:	Vancouver School of Economics
Subject:	Uncertianty \| Design of Experiments

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Series:	Microeconomics.ca working papers.
Type of publication:	Book / Working Paper
Notes:	19 pages
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty ; C9 - Design of Experiments
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011165407