Prince: An Improved Method for Measuring Incentivized Preferences
43 Pages Posted: 4 Oct 2014 Last revised: 16 Apr 2015
Date Written: April 16, 2015
This paper introduces the Prince incentive system for measuring preferences. Prince clarifies consequences of decisions and incentive compatibility of experimental choice questions to subjects. It combines the efficiency and precision of matching with the 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 the opaqueness in Becker-DeGroot Marschak and strategic behavior in adaptive experiments. It helps reducing violations of isolation in the random incentive system. Using Prince we shed new light on willingness to accept and the major components of decision making under uncertainty: utilities, subjective beliefs, and ambiguity attitudes.
Keywords: incentive compatibility, random incentive system, BDM, choice list, matching
JEL Classification: C91, D81
Suggested Citation: Suggested Citation