Noise and bias in eliciting preferences

Hey, John D. and Morone, Andrea and Schmidt, Ulrich (2007) Noise and bias in eliciting preferences. [Discussion Paper]. p. 28. Discussion Papers in Economics (No. 07/04).

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Official URL: http://www.york.ac.uk/media/economics/documents/di...

Abstract/Index

In the context of eliciting preferences for decision making under risk, we ask the question: "which might be the 'best' method for eliciting such preferences?". It is well known that different methods differ in terms of the bias in the elicitation; it is rather less well-known that different methods differ in terms of their noisiness. The optimal trade-off depends upon the relative magnitutdes of these two effects. We examine four different elicitation mechanisms (pairwise choice, willingness-to-pay, willingness-to-accept, and certainty equivalents) and estimate both effect. Our results suggest that economists might be better advised to use what appears to be a relatively inefficient elicitation technique (i.e. pairwise choice) in order to avoid trhe bias in better-known and more widely-used techniques.


Item Type:Report / Paper (Discussion Paper)
Research documents and activity classification:Working Papers > Refereed Working Papers / of international relevance
Divisions:Department of Business and Management
Additional Information:The paper has been published as: John Hey & Andrea Morone & Ulrich Schmidt, 2009. "Noise and bias in eliciting preferences," Journal of Risk and Uncertainty, Springer, vol. 39(3), pages 213-235, December.
Uncontrolled Keywords:Pairwise choice; willingness-to-pay; willingness-to-accept; errors; noise; biases.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Maria Teresa Nistico
Deposited On:06 Dec 2010 15:57
Last Modified:28 May 2013 20:38

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