Quotation Csermely, Tamás, Rabas, Alexander. 2016. How to reveal people's preferences: Comparing time consistency and predictive power of multiple price list risk elicitation methods. Journal of Risk and Uncertainty 53 (2-3), 107-136.


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Abstract

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.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Risk and Uncertainty
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, INF-A, STRAT-B, VW-C, WH-B
Language English
Title How to reveal people's preferences: Comparing time consistency and predictive power of multiple price list risk elicitation methods
Volume 53
Number 2-3
Year 2016
Page from 107
Page to 136
Reviewed? Y
DOI http://dx.doi.org/10.1007/s11166-016-9247-6
JEL JEL C91, D81

Associations

People
Csermely, Tamás (Former researcher)
External
Rabas, Alexander (University of Vienna, Austria)
Organization
Institute for Public Sector Economics IN (Details)
Department of Economics DP (Details)
Research Institute for International Taxation FI (Details)
Competence Center for Experimental Research WE (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5311 Public finance (Details)
5325 Political economics (Details)
5351 Public economy (Details)
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