Title: Behavioral Incentive Compatibility of the Preference Elicitation Mechanisms

Speaker: SOHN Jin-yeong from Dongbei University of Finance and Economics

Time: 10:00-11:30 am on Sept 1st (Monday)

Onsite: Hong Yuan 311

Abstract: We propose a test of behavioral incentive compatibility (BIC) of preference elicitation mechanisms, obvious monotonicity (OM). Applying this to Oprea's (2024a) "mirror" experiment (intended to challenge the behavioral foundations of risk preferences) we show that the elicitation method itself violates BIC. First, we show that simplicity equivalent elicitation fails OM: 55% of subjects assign a lower value to 90 boxes of $25 than to 10 boxes of $25. Second, the original mirror anomalies are primarily driven by the random choices of subjects who violate OM. Third, among those who satisfy OM, simplicity equivalents are much closer to expected values. In light of the evidence, we propose that simplicity equivalents can serve as a test of BIC in future experiments.