Vecon Lab Value Elicitation with a Structured Choice Manu: Introduction

This program sets up an individual decision-making task in which each person is presented with a price list for which the crossover point determines a money value (certainty equivalent) for a risky prospect. Alternatively, the program can be used to elicit money values for a physical object specified by the experimenter, or even for a money payment at a specified future date, which can indicate time preference.

The available certainty equivalent values are provided in a structured choice menu that can be set to provide a second stage choice on a fine grid. Precise crossovers are especially useful in eliciting present and future values. An alternative approach is to use a choice menu with a fixed money amount on one side of each row and risky prospects with increasing probabilities of the high payoff on the other side, so that the crossover provides a "probability equivalent" to the fixed money payoff, which can be used to make inferences about risk preference (Murnighan, Roth and Schoumaker, 1988). There is also a setup option presents subjects with a set of alternative investment portfolios with increasing spreads between high and low payoffs, which can be used to infer risk aversion (e.g., Eckel and Grossman, 2002).

Vecon Lab - July 17, 2019