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Do Monetary Incentives and Chained Questions Affect the Validity of Risk Estimates Elicited via the Exchangeability Method? An Experimental Investigation

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  • Simone Cerroni
  • Sandra Notaro
  • W. Douglass Shaw

Abstract

Using a laboratory experiment, we investigate the validity of stated risks elicited via the Exchangeability Method (EM) by defining a valuation method based on de Finetti�s notion of coherence. The reliability of risk estimates elicited through the EM has been theoretically questioned because the chained structure of the game, in which each question depends on the respondent�s answer to the previous one, is thought to potentially undermine the incentive compatibility of the elicitation mechanism even when real monetary incentives are provided. Our results suggest that superiority of real monetary incentives is not evident when people are presented with chained experimental design

Suggested Citation

  • Simone Cerroni & Sandra Notaro & W. Douglass Shaw, 2011. "Do Monetary Incentives and Chained Questions Affect the Validity of Risk Estimates Elicited via the Exchangeability Method? An Experimental Investigation," Department of Economics Working Papers 1110, Department of Economics, University of Trento, Italia.
    • Handle: RePEc:trn:utwpde:1110
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    1. Menapace, Luisa & Colson, Gregory & Raffaelli, Roberta, 2012. "Cognitive Heuristics and Farmers’ Perceptions of Risks Related to Climate Change," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124770, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    lab experiment; risk elicitation; exchangeability; validity; pesticide residue;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I10 - Health, Education, and Welfare - - Health - - - General

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