Simple belief elicitation: An experimental evaluation
- Author(s)
- Karl Schlag, James Tremewan
- Abstract
We present a method for eliciting beliefs about probabilities when multiple realisations of an outcome are available, the "frequency" method. The method is applicable for any reasonable utility function. Unlike existing techniques that account for deviations from risk-neutrality, this method is highly transparent to subjects and easy to implement. Rather than identifying point beliefs these methods identify bounds on beliefs, thus trading off precision for generality and simplicity. An experimental comparison of this method and a popular alternative, the Karni method, shows that subjects indeed find the frequency method easier to understand. Significantly, we show that confusion due to the complexity of the Karni method leads to less cognitively able subjects erroneously stating a belief of 50%, a bias not present in the frequency method.
- Organisation(s)
- Department of Economics
- External organisation(s)
- University of Auckland
- Journal
- Journal of Risk and Uncertainty
- Volume
- 62
- Pages
- 137 - 155
- No. of pages
- 19
- ISSN
- 0895-5646
- DOI
- https://doi.org/10.1007/s11166-021-09349-6
- Publication date
- 04-2021
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502057 Experimental economics, 502021 Microeconomics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics, Accounting, Finance
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/simple-belief-elicitation-an-experimental-evaluation(fbb89f81-025c-49bf-b26d-52dba6d01fc9).html