Game structure obviousness in homegrown preference elicitation

Abstract

The Becker–Degroot–Marschak (BDM) mechanism is widely used in valuation research for its theoretical incentive compatibility and simplicity. However, recent work challenges its ability to replicate theoretical predictions in induced value (IV) settings. The Game Structure Obvious (GSO) mechanism has emerged as a promising alternative, but it has not been tested in homegrown contexts, which are central to environmental and market valuations of new or unfamiliar products. We compare the BDM mechanism and the GSO mechanism in an online experiment eliciting consumers’ willingness to pay for oranges from antibiotic-treated trees under real and hypothetical incentives. Our findings reveal a counterintuitive methodological insight: while the GSO mechanism is perceived as simpler and more intuitive than the BDM mechanism in all treatments, it induces significant hypothetical bias in early decision rounds, while the BDM mechanism does not. Under real incentives, both mechanisms yield equivalent valuations, showcasing that incentives generate similar valuations between the two methods. We find that the hypothetical bias in the GSO mechanism stems from selective inattention, with deliberation time serving as the main mediator. Overall, the GSO mechanism improves transparency but may amplify bias without sufficient attention, whereas the BDM mechanism provides more stable results in the homegrown setting.

Andreas C. Drichoutis

Professor of Consumer Behavior

His research interests are focused on decision making across a broad spectrum of topics pertinent to agricultural/food economics. His contributions are notably diversified spanning the area of contingent valuation and experimental auctions methods, choice under risk, inter-temporal decision making and applied demand analysis. Most of his research applies experimental economics methods to answer questions relevant to agricultural economists and decision scientists.