Eliciting Subjective Probabilities with Binary Lotteries
AbstractWe evaluate the binary lottery procedure for inducing risk neutral behavior in a subjective belief elicitation task. Harrison, Martinez-Correa and Swarthout  found that the binary lottery procedure works robustly to induce risk neutrality when subjects are given one risk task defined over objective probabilities. Drawing a sample from the same subject population, we find evidence that the binary lottery procedure induces linear utility in a subjective probability elicitation task using the Quadratic Scoring Rule. We also show that the binary lottery procedure can induce direct revelation of subjective probabilities in subjects with certain Non-Expected Utility preference representations that satisfy weak conditions that we identify.
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Bibliographic InfoPaper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2012-16.
Date of creation: Sep 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-30 (All new papers)
- NEP-EXP-2012-09-30 (Experimental Economics)
- NEP-UPT-2012-09-30 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glenn W. Harrison & Jimmy MartÃnez-Correa & J. Todd Swarthout, 2012.
"Inducing Risk Neutral Preferences with Binary Lotteries: A Reconsideration,"
Experimental Economics Center Working Paper Series
2012-02, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- Harrison, Glenn W. & Martínez-Correa, Jimmy & Swarthout, J. Todd, 2013. "Inducing risk neutral preferences with binary lotteries: A reconsideration," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 145-159.
- repec:bla:restud:v:76:y:2009:i:4:p:1461-1489 is not listed on IDEAS
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- Glenn W. Harrison & Jimmy MartÃnez-Correa & J. Todd Swarthout, 2012. "Reduction of Compound Lotteries with Objective Probabilities: Theory and Evidence," Experimental Economics Center Working Paper Series 2012-04, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- Theo Offerman & Joep Sonnemans & Gijs Van De Kuilen & Peter P. Wakker, 2009. "A Truth Serum for Non-Bayesians: Correcting Proper Scoring Rules for Risk Attitudes ," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1461-1489.
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