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

Furthermore, the patterns of observed distributional dependence are found to be largely
inconsistent with the predictions of the models of Horowitz and Lusk, et al. There is suggestive
evidence from the survey that students completed at the conclusion of the experiment that
supports the more generalized pattern of underbidding predicted by Kaas and Ruprecht.
Collectively speaking, the measures of risk aversion indicate that subjects are not treating the
BDM mechanism as a first-price auction. The proposed mass-seeking framework provides a
substantially better description of the empirical patterns among the subjects sensitive to
distributional dependence, including the fact that these effects diminish with distance.
The level of detail of the instructions matters to a surprising degree. While the more detailed
instructions yield responses that are more stable and less sensitive to distributional dependence,
it is not the case that they necessarily more accurately reflect the true valuations of the subjects.
Insofar as distributional dependence may pose complications or difficulties for eliciting valuations
from subjects, the solution is arguably not to be found in increasing the level of detail of the
instructions.
The BDM mechanism is and remains an important tool for measuring the valuations of
subjects both inside and outside of the lab. Through its novel dataset, this study contributes to
our understanding of how this oft-used and relied-upon methodology should be used and
interpreted.
38