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Publications
  • April 2020
  • Article
  • Journal of Economic Behavior & Organization

Field Comparisons of Incentive-Compatible Preference Elicitation Techniques

By: Shawn A. Cole, A. Nilesh Fernando, Daniel Stein and Jeremy Tobacman
  • Format:Print
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Abstract

Knowledge of consumer demand is important for firms, policy makers, and economists. One common tool for incentive-compatible demand elicitation, the Becker-DeGroot-Marschak (BDM) mechanism, has been widely used in laboratory settings but rarely evaluated for reliability at large scale in the field. In two field experiments (for a new agricultural information service and rainfall index insurance) we compare demand curves estimated from BDM implementations with demand curves estimated from choices at individual randomized fixed prices. In the test (for an agricultural information service) we obtain demand curves from BDM and fixed prices that align closely and are unable to reject equivalence of the demand curves. For the second test (of rainfall index insurance) the results are mixed, with the distributions lining up well at certain points of the demand curve and deviating at others. Overall, we find no evidence for systematic bias. Our evidence suggests that a “reframed” version of BDM that uses discrete prices may minimize non-standard bidding behavior and is well suited to future experimental work in low-literacy environments.

Keywords

Incentive-compatible Elicitation; Experimental Methods; Weather Insurance; Rainfall Insurance; Agricultural Extension; Demand And Consumers

Citation

Cole, Shawn A., A. Nilesh Fernando, Daniel Stein, and Jeremy Tobacman. "Field Comparisons of Incentive-Compatible Preference Elicitation Techniques." Journal of Economic Behavior & Organization 172 (April 2020): 33–56.
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About The Author

Shawn A. Cole

Finance
→More Publications

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    • January 2021
    • Economic Journal (Royal Economic Society)

    'Mobile'izing Agricultural Advice: Technology Adoption, Diffusion and Sustainability

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    Handbook on Using Administrative Data for Research and Evidence-based Policy

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    Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies

    By: Shawn Cole, Martin Melecky, Florian Mölders and Tristan Reed
More from the Authors
  • 'Mobile'izing Agricultural Advice: Technology Adoption, Diffusion and Sustainability By: Shawn A. Cole and A. Nilesh Fernando
  • Handbook on Using Administrative Data for Research and Evidence-based Policy By: Shawn Cole, Iqbal Dhaliwal, Anja Sautmann and Lars Vilhuber
  • Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies By: Shawn Cole, Martin Melecky, Florian Mölders and Tristan Reed
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