Daniel Hermann

Comprehension in risk elicitation experiments

ABSTRACT Economic experiments are increasingly conducted with field populations for whom comprehension of instructions may be more difficult to achieve. We investigate how framing experimental instructions in a familiar context and incentivizing the experimental task may affect comprehension. Based on an experiment with 146 German farmers, we compare four different versions of a Holt-and-Laury multiple price list. We find that incentives have a small positive effect on comprehension, as measured by the probability of making inconsistent choices and subjects’ self-assessment. In the absence of incentives, framing negatively affects comprehension. Comprehension is enhanced for farmers who score high on a numeracy test. We conclude that contextual framing might confuse subjects, whereas incentives can help to facilitate comprehension of experimental instructions.

Anchoring effects in experimental discount rate elicitation

ABSTRACT Discount rates are often elicited using incentivized or hypothetical multiple price lists. We conduct two multiple price lists according to Coller and Williams (Experimental Economics 2: 107–127, 1999) with varying ranges of larger–later payments. Participants carry out both tasks and are randomly assigned to a task order as well as to a payment or no-payment treatment. Our results indicate that the range of the first completed task anchors discount rate decisions. Participants who begin the task with the lower range of the larger–later payments stated lower discount rates than participants who start with the task containing a wider range. Paying monetary incentives does not influence the detected anchor effect.

Displaying expected values in risk elicitation tasks: the effect of information in experimental risk research

Abstract We investigate the influence of providing expected lottery results to experiment participants in two common risk attitude elicitation tasks. In a between-subject design, either the Holt and Laury task or the Eckel and Grossman task is carried out by a sample of 208 students. We find no significant effect of shown expected values on the risk attitude measured by the tasks. This result even holds true if we divide the experiment participants into specific sub-groups, i.e. female and male, or lower numeracy and higher numeracy participants. Furthermore, comprehension and processing time are not significantly influenced by presented expected values. Therefore, we conclude that providing information on expected values does not influence decision-making in tasks involving risk. This result indicates the robustness of elicited risk attitudes to variation in common experimental methods, and demonstrates that more information could be provided without creating bias in the results.

Die Zeitpräferenz von Landwirten

The investigation of entrepreneurs’ time preference is of great political and scientific interest. There are various experimental methods to detect the time preference measured in discount rates. We compare two approaches in application on German farmers. Our results reveal that both methods lead to different discount rates for the farmers taking part in the experiment. Moreover, there is a partial declining discount rate when using higher amounts of money, and we found sensitivities regarding the illustration of the discount rate within the experimental task.