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| David de Meza and Diane Reyniers |
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| ''Debiasing the Becker – DeGroot – Marschak valuation mechanism'' |
| ( 2013, Vol. 33 No.2 ) |
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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). |
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| Keywords: BDM mechanism, bias. |
JEL: C9 - Design of Experiments: General
D8 - Information, Knowledge, and Uncertainty: General |
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| Manuscript Received : Oct 09 2012 | | Manuscript Accepted : Jun 14 2013 |
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