Becker–DeGroot–Marschak method

URL

http://en.wikipedia.org/wiki/Becker%E2%80%93DeGroot%E2%80%93Marschak_method

Description

The Becker–DeGroot–Marschak method (BDM), named after Gordon M. Becker, Morris H. DeGroot and Jacob Marschak for the 1964 Behavioral Science paper, "Measuring Utility by a Single-Response Sequential Method" is an incentive-compatible procedure used in experimental economics to measure willingness to pay (WTP).[1]

Today there are several variations of the BDM methodology. In one common way, the subject formulates a bid. The bid is compared to a price determined by a random number generator. If the subject's bid is greater than the price, he or she pays the price and receives the item being auctioned. If the subject's bid is lower than the price, he or she pays nothing and receives nothing.