When it comes to experiments with multiple-round decisions under risk, the current payoff mechanisms are incentive compatible with either outcome weighting theories or probability weighting theories, but not both. In this paper, I introduce a new payoff mechanism, the Accumulative Best Choice (“ABC”) mechanism that is incentive compatible for all rational risk preferences. I also identify three necessary and sufficient conditions for a payoff mechanism to be incentive compatible for all models of decision under risk with complete and transitive preferences. I show that ABC is the unique incentive compatible mechanism for rational risk preferences in a multiple-task setting. In addition, I test empirical validity of the ABC mechanism in the lab. The results from both a choice pattern experiment and a preference (structural) estimation experiment show that individual choices under the ABC mechanism are statistically not different from those observed with the one-round task experimental design. The ABC mechanism supports unbiased elicitation of both outcome and probability transformations as well as testing alternative decision models that do or do not include the independence axiom.
Private savings have experienced remarkable divergences across countries in recent years. In this paper we use a new factor, economic structural changes, to explain the differences of private savings in developing countries and its impacts on current account balance. We point out that growth related structural changes can be decomposed into productivity changes and job reallocations, which will affect private savings differently through wage effect and labor reallocation effect. Wage variation resulting from productivity growth will increase private savings, while labor reallocation moving from low income to high income sectors will reduce savings. Using sector level data, we find strong empirical evidence that structural change patterns have a significant impact on private savings and current account balance. This result provides another way to understand the recent “savings glut” in East Asian countries and also has some implications for the large current account imbalance issue. 相似文献