Procedures for eliciting time preferences
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We study three procedures to elicit attitudes towards delayed payments: the Becker-DeGroot-Marschak procedure; the second price auction; and the multiple price list. The payment mechanisms associated with these methods are widely considered as incentive compatible, thus if preferences satisfy Procedure Invariance, which is also widely (and often implicitly) assumed, they should yield identical time preference distributions. We find instead that the monetary discount rates elicited using the Becker-DeGroot-Marschak procedure are significantly lower than those elicited with a multiple price list. We show that the behavior we observe is consistent with an existing psychological explanation of preference reversals.
Freeman , D , Manzini , P , Mariotti , M & Mittone , L 2015 ' Procedures for eliciting time preferences ' School of Economics & Finance Discussion Paper , no. 1513 , University of St Andrews , St Andrews , pp. 1-29 .
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(c) The authors 2015
DescriptionPrecursors of this paper were originally circulated under the titles ‘The elicitation of time preferences’ and ‘A Case of Framing Effects: The Elicitation of Time Preferences’ -these received partial financial support through the ESRC grant RES-000-22-1636 (Manzini and Mariotti). Further funding was provided by CEEL.
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