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An Experimental Comparison of Induced and Elicited Beliefs

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  • Terrance Hurley

    ()

  • Jason Shogren

    ()

Abstract

Understanding choice under risk requires knowledge of beliefs and preferences. A variety of methods have been proposed to elicit peoples’ beliefs. The efficacy of alternative methods, however, has not been rigorously documented. Herein we use an experiment to test whether an induced probability can be recovered using an elicitation mechanism based on peoples’ predictions about a random event. We are unable to recover the induced belief. Instead, the estimated belief is systematically biased in a way that is consistent with anecdotal evidence in the economics, psychology, and statistics literature: people seem to overestimate low and underestimate high probabilities. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11166-005-6565-5
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Bibliographic Info

Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 30 (2005)
Issue (Month): 2 (January)
Pages: 169-188

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Handle: RePEc:kap:jrisku:v:30:y:2005:i:2:p:169-188

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Web page: http://www.springerlink.com/link.asp?id=100299

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Keywords: beliefs; elicit; induce; probability; risk;

References

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Citations

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Cited by:
  1. Armantier, Olivier & Treich, Nicolas, 2013. "Eliciting beliefs: Proper scoring rules, incentives, stakes and hedging," European Economic Review, Elsevier, vol. 62(C), pages 17-40.
  2. Ong, David, 2008. "Sorting with shame in the laboratory," MPRA Paper 16523, University Library of Munich, Germany, revised 27 Jul 2009.
  3. Blanco, Mariana & Engelmann, Dirk & Koch, Alexander K. & Normann, Hans-Theo, 2008. "Belief Elicitation in Experiments: Is there a Hedging Problem?," IZA Discussion Papers 3517, Institute for the Study of Labor (IZA).
  4. Kaushik Basuy & Leonardo Becchetti & Luca Stanca, 2008. "Experiments with the Traveler's Dilemma: Welfare, Strategic Choice and Implicit Collusion," Working Papers 147, University of Milano-Bicocca, Department of Economics, revised Oct 2008.
  5. Teisl, Mario F. & Roe, Brian E., 2010. "Consumer willingness-to-pay to reduce the probability of retail foodborne pathogen contamination," Food Policy, Elsevier, vol. 35(6), pages 521-530, December.
  6. Michael McBride, 2010. "Threshold uncertainty in discrete public good games: an experimental study," Economics of Governance, Springer, vol. 11(1), pages 77-99, February.
  7. James Tremewan & Chloé Le Coq & Alexander D. Wagner, 2013. "Social Centipedes: the Impact of Group Identity on Preferences and Reasoning," Vienna Economics Papers 1305, University of Vienna, Department of Economics.
  8. Karl Schlag & James Tremewan & Joel van der Weele, 2014. "A Penny for Your Thoughts:A Survey of Methods for Eliciting Beliefs," Vienna Economics Papers 1401, University of Vienna, Department of Economics.
  9. Langrock, Ines & Hurley, Terrance M., 2006. "Risk Preferences, Perceptions and Systematic Biases," 2006 Annual meeting, July 23-26, Long Beach, CA 21343, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Ram Ranjan, 2008. "The future of global warming: will it be emissions control or environmental damages?," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 13(4), pages 401-418, May.
  11. W. Viscusi & William Evans, 2006. "Behavioral Probabilities," Journal of Risk and Uncertainty, Springer, vol. 32(1), pages 5-15, January.

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