Skip to main content
Article thumbnail
Location of Repository

Incentive compatibility in the field: a test of the Becker-De Groot-Marschak mechanism

By Jim Berry, Gregory Fischer and Raymond Guiteras


This paper describes the field implementation and validation of the Becker‐DeGroot‐Marschak (BDM) (1964) mechanism to measure willingness to pay in the context of a point‐of‐use water treatment product in Ghana. BDM has the potential to provide precise data through which to study both screening and heterogeneous treatment effects, which are of central importance in understanding the optimal pricing and impact of health goods in the developing world. We validate BDM against valuations from a take it or leave it (TIOLI) offer in a true field setting, using sales of long‐lasting water filters to rural households in northern Ghana. We find that individuals systematically underbid in BDM relative to TIOLI. By this metric, BDM is not an accurate tool for eliciting willingness to pay. We find no evidence that these differences are driven by either anchoring to the TIOLI price or by strategic bidding on the part of respondents in the BDM treatment

Topics: HB Economic Theory
Year: 2010
OAI identifier:
Provided by: LSE Research Online
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • (external link)
  • (external link)
  • Suggested articles

    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.