Testing Distributional Dependence in the Becker-DeGroot-Marschak ...

individually. In an experimental setting there is a nontrivial risk that some seemingly innocuous
number unexpectedly serves as an anchor point for subjects’ perceptions of the bounds or shape
of the distribution. 49
Another—although probably lesser—concern is the credibility of the experiment and
experimenter. Revealing the distribution of random prices to subjects offers greater transparency;
hiding it has the potential to raise suspicion among subjects. Regardless of what their valuations
for an item or their beliefs about probabilities might be, it’s important that subjects in economics
experiments can trust that they aren’t being deceived. Offering up front to reveal the
distribution after the resolution of the BDM mechanism or at the conclusion of the experiment
(as in Bohm, et al.) seems an eminently appropriate precaution.
It is an open question whether nondisclosure will yield subject responses that are more
accurate reflections of subject valuations, and further study should be undertaken.
5.5 Implications for Research
The findings of this experiment suggest that in designing experiments using the BDM
mechanism, care should be taken not to use a distribution where the subject responses are
expected to lie at one of the extremes of the support. Given the mass-seeking tendency of most
subjects, when elicitations are found to be generally lower (higher) than the mean of the
distribution of random prices used, added caution is warranted when drawing an inference that
these responses are significantly higher (lower) than a given level.
As pointed out by Mazar, et al., studies that rely on the BDM mechanism to obtain absolute
estimates of valuations for specific goods will be the most sensitive to any effects of distributional
dependence. Studies that use the BDM mechanism to determine merely relative valuations
between goods will be more robust—provided that the same distribution of random prices is used
for each of the goods being compared.
49 For more on anchoring, see Tversky and Kahneman (1974).
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