Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89721
Authors: 
Güth, Werner
Ploner, Matteo
Soraperra, Ivan
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4575
Abstract: 
Experimental studies of the WTP-WTA gap avoid social trading by implementing an incentive compatible mechanism for each individual trader. We compare a traditional random price mechanism and a novel elicitation mechanism preserving social trading, without sacrificing mutual incentive compatibility. Furthermore, we focus on risky goods - binary monetary lotteries - for which asymmetries in evaluations are more robust with respect to experimental procedures. For both elicitation mechanisms, the usual asymmetry in evaluation by sellers and buyers is observed. An econometric estimation sheds new light on its causes: potential buyers are over-pessimistic and systematically underweight the probability of a good outcome.
Subjects: 
WTP-WTA gap
risk
elicitation mechanisms
probability weighting
JEL: 
D81
Document Type: 
Working Paper

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