A common methodology in experimental research is the use of random incentive mechanisms. This note investigates possible distortion induced by such mechanisms in the context of choice under risk. In the baseline (one task) treatment of our experiment we observe risk behavior in a given choice problem. We show that by integrating a second, asymmetrically dominated choice problem in a random incentive mechanism behavior can be systematically manipulated. This implies that the isolation hypothesis is violated and the random incentive mechanism does not elicit true preferences in our example.
Cox, James; Sadiraj, Vjollca; and Schnier, Ulrich, "Asymmetrically Dominated Choice Problems, the Isolation
Hypothesis and Random Incentive Mechanisms" (2012). ExCEN Working Papers. 58.