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Title:Noise and bias in eliciting preferences PDF Logo
Authors:Hey, John Denis
Morone, Andrea
Schmidt, Ulrich
Issue Date:2007
Series/Report no.:Kieler Arbeitspapiere 1386
Abstract:In the context of eliciting preferences for decision making under risk, we ask the question: "which might be the 'best' method for eliciting such preferences?". It is well known that different methods differ in terms of the bias in the elicitation; it is rather less well-known that different methods differ in terms of their noisiness. The optimal trade-off depends upon the relative magnitudes of these two effects. We examine four different elicitation mechanisms (pairwise choice, willingness-to-pay, willingness-to-accept, and certainty equivalents) and estimate both effects. Our results suggest that economists might be better advised to use what appears to be a relatively inefficient elicitation technique (i.e. pairwise choice) in order to avoid the bias in better-known and more widely-used techniques.
Subjects:Pairwise choice
WTP
WTA
Errors
Noise
Biases
JEL:C91
C81
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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