Asymmetrically Dominated Alternatives and Random Incentive Mechanisms

Authors

• Schmidt
• U.

Publication Date

JEL Classification

Key Words

This note presents an experimental study of the random lottery incentive mechanism. In the baseline treatment we observe risk behavior in a given choice problem. We show that by integrating a second, asymmetrically dominated choice problem in a random incentive mechanism risk behavior can be manipulated systematically. This implies that the isolation hypothesis is violated the random incentive mechanism does not elicit true preferences.

Kiel Institute Expert