A More Efficient Method to Elicit Economic Preferences than the Multiple Price List Design

Abstract

Since Holt and Laury (2002) suggested the Multiple Price List design (MPL), MPL has been widely used for economic preference elicitation experiment. But, as Andersen et al. (2006) pointed out, MPL only elicits interval estimates and could be susceptible to framing effect. Even though Harrison et al. (2005) suggested the Iterative Multiple Price List design (iMPL) as a solution for interval estimates, iMPL seems to make an experiment burdensome requiring a subject to make more economic decisions than MPL. In this paper, I suggest a New Method (NM) which can elicit smaller interval estimates than MPL with same or even smaller number of questions. This is possible because NM uses information which is already known and knewly emerged during the experiment. This process is contained in NM in the form of bayesian updating and sequential questioning structure.