Working Paper

Noise and Bias in Eliciting Preferences


  • Hey
  • J.D.
  • Morone
  • A.
  • Schmidt
  • U.
Publication Date

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 magnitudes of these two effects. We examine four different elicitation mechanisms (pairwise choice, willingness-to-pay, willingness-to-accept, and certainty equivalents) and estimate both effects. 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 the bias in better-known and more widely-used


Kiel Institute Expert


JEL Classification
C81, C91

Key Words

  • biases
  • errors
  • noise
  • pairwise choice
  • WTA
  • WTP