On the Measurement of Strength of Preference in Units of Money
We report an experimental study that aims to elicit monetary measures of strength of preference in choices involving pairs of risky prospects. Despite extensive testing to refine the instruments used, we find that these money measures are systematically biased upwards relative to subsequent binary choices. We discuss possible reasons for this bias and its broader implications.
The introduction of the Euro is a very ambitious change in the monetary environment of some of the largest and richest industrial economies, one that is unlike any other currency reforms.