Debiasing the Becker – DeGroot – Marschak valuation mechanism

de Meza, David

(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
Keywords	BDM mechanism,bias
Departments	Management
Date Deposited	31 Jul 2013 09:05
URI	https://researchonline.lse.ac.uk/id/eprint/51250

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HB Economic Theory

http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I2-P136.pdf (Publisher)
http://ideas.repec.org/s/ebl/ecbull.html (Official URL)

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