American Economic Journal: Microeconomics
no. 3, August 2022
Elicitation mechanisms typically presume only money enters utility functions. However, nonmonetary objectives are confounders. In particular, psychologists argue people favor bets where ability is involved over equivalent random bets—a preference for control. Our new elicitation method mitigates control objectives and determines that under the widely used matching probabilities method, subjects report beliefs 18 percent higher than their true beliefs to increase control. Nonmonetary objectives account for 68 percent of what would normally be measured as overconfidence. We also find that control is only a desire to bet on doing well; betting on doing badly is perceived as a negative.
Benoît, Jean-Pierre, Juan Dubra, and Giorgia Romagnoli.
"Belief Elicitation When More than Money Matters: Controlling for "Control"."
American Economic Journal: Microeconomics,
Design of Experiments: Laboratory, Individual
Consumer Economics: Theory
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making