Belief Elicitation When More Than Money Matters: Controlling for “Control”
- American Economic Journal: Microeconomics (Forthcoming)
Elicitation mechanisms typically presume only money enters utility
functions. However, non-monetary objectives are confounders. In particular,
psychologists argue people favour 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 ostensibly incentive compatible matching probabilities method, subjects
report beliefs 18% higher than their true beliefs to increase control.
Non-monetary objectives account for 68% 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.
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