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  4. February 2016
  5. Belief Elicitation with a Synchronized Lottery Choice Menu That Is Invariant to Risk Attitudes

Belief Elicitation with a Synchronized Lottery Choice Menu That Is Invariant to Risk Attitudes

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Abstract

This paper uses a Bayesian information processing task to compare belief elicitation mechanisms including a quadratic scoring rule, a Becker-DeGroot-Marschak pricing procedure, and a two-stage menu of lottery choices that is structured to identify a precise point of probability indifference. The choice menu yields a higher incidence of correct Bayesian responses and lower belief error averages. Unlike the quadratic scoring rule, the binary payoffs for the lottery choice mechanism are synchronized to provide theoretical incentive-compatibility regardless of risk attitudes. In addition, the choice menu structure is more transparent and intuitive than the Becker-DeGroot-Marschak procedure. (JEL C91, D44, D81, D83)

Citation

Holt, Charles A., and Angela M. Smith. 2016. "Belief Elicitation with a Synchronized Lottery Choice Menu That Is Invariant to Risk Attitudes." American Economic Journal: Microeconomics, 8 (1): 110-39. DOI: 10.1257/mic.20130274

Additional Materials

JEL Classification

  • C91 Design of Experiments: Laboratory, Individual
  • D44 Auctions
  • D81 Criteria for Decision-Making under Risk and Uncertainty
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
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