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Debiasing the Becker – DeGroot – Marschak valuation mechanism

de Meza, David ORCID: 0000-0002-5638-8310 and Reyniers, Diane J. ORCID: 0000-0003-0677-2020 (2013) Debiasing the Becker – DeGroot – Marschak valuation mechanism. Economics Bulletin, 33 (2). pp. 1446-1456. ISSN 1545-2921

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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).

Item Type: Article
Official URL:
Additional Information: © 2013 The Authors
Divisions: Management
Subjects: H Social Sciences > HB Economic Theory
JEL classification: C - Mathematical and Quantitative Methods > C9 - Design of Experiments
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty
Date Deposited: 31 Jul 2013 09:05
Last Modified: 16 May 2024 01:40

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