Working Paper

Asymmetrically Dominated Alternatives and Random Incentive Mechanisms


  • Schmidt
  • U.
Publication Date

This note presents an experimental study of the random lottery incentive mechanism. In the baseline treatment we observe risk behavior in a given choice problem. We show that by integrating a second, asymmetrically dominated choice problem in a random incentive mechanism risk behavior can be manipulated systematically. This implies that the isolation hypothesis is violated the random incentive mechanism does not elicit true preferences.

Kiel Institute Expert


JEL Classification
C91, D81

Key Words

  • asymmetrically dominated alternatives
  • isolation
  • Random incentive mechanism