The question of how to measure and classify people's risk preferences is
of substantial importance in the field of economics. Inspired by the multitude of ways
used to elicit risk preferences, we conduct a holistic investigation of the most prevalent
method, the multiple price list (MPL) and its derivations. In our experiment,
we find that revealed preferences differ under various versions of MPLs as well as
yield unstable results within a 30-minute time frame. We determine the most stable
elicitation method with the highest forecast accuracy by using multiple measures
of within-method consistency and by using behavior in two economically relevant
games as benchmarks. A derivation of the well-known method by Holt and Laury
(American Economic Review 92(5):1644-1655, 2002), where the highest payoff is
varied instead of probabilities, emerges as the best MPL method in both dimensions.
As we pinpoint each MPL characteristic's effect on the revealed preference and its
consistency, our results have implications for preference elicitation procedures in
general.
| Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:5464 |
| Date | January 2016 |
| Creators | Csermely, Tamás, Rabas, Alexander |
| Publisher | Springer |
| Source Sets | Wirtschaftsuniversität Wien |
| Language | German |
| Detected Language | English |
| Type | Article, PeerReviewed |
| Format | application/pdf |
| Rights | Creative Commons: Attribution 4.0 International (CC BY 4.0) |
| Relation | http://dx.doi.org/10.1007/s11166-016-9247-6, http://link.springer.com/, http://epub.wu.ac.at/5464/ |
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