Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98448
Authors: 
Güth, Werner
Ploner, Matteo
Soraperra, Ivan
Year of Publication: 
2013
Series/Report no.: 
Jena Economic Research Papers 2013-047
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: 
elicitation mechanisms
probability weighting
risk
WTP-WTA gap
JEL: 
D81
D03
C91
Document Type: 
Working Paper

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