This paper introduces the Prince incentive system for measuring preferences. Prince is a special version of the random incentive system that enhances isolation and makes incentive compatibility more transparent to subjects. It allows for the precise and direct elicitation of indifference values with the clarity and validity of choice lists. Prince avoids the opaqueness of the Becker-DeGroot-Marschak mechanism and precludes strategic behavior in adaptive experiments. Using Prince, we shed new light on willingness to accept and the major components of decision under uncertainty: utilities, subjective beliefs, and ambiguity attitudes. Prince outperforms a classical implementation of the random incentive system.
External Link(s)
Citation
Wakker, Peter. 2018. "Prince: An Improved Method for Measuring Incentivized Preferences." AEA RCT Registry. August 01. https://doi.org/10.1257/rct.3183-1.0.