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Eliciting Beliefs: Proper Scoring Rules, Incentives, Stakes and Hedging

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  • Armantier, Olivier
  • Treich, Nicolas

Abstract

Accurate measurements of probabilistic beliefs have become increasingly important both in practice and in academia. Introduced by statisticians in the 1950s to promote truthful reports in simple environments, Proper Scoring Rules (PSR) are now arguably the most popular incentivized mechanisms to elicit an agent's beliefs. This paper generalizes the analysis of PSR to richer environments relevant to economists. More speci cally, we combine theory and experiment to study how beliefs reported with a PSR may be biased when i) the PSR payments are increased, ii) the agent has a financial stake in the event she is predicting, and iii) the agent can hedge her prediction by taking an additional action. Our results reveal complex distortions of reported beliefs, thereby raising concerns about the ability of PSR to recover truthful beliefs in general economic environments.

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Bibliographic Info

Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 10.26.332.

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Date of creation: Dec 2010
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Handle: RePEc:ler:wpaper:10.26.332

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  1. Simon Gächter & Elke Renner, 2010. "The effects of (incentivized) belief elicitation in public goods experiments," Experimental Economics, Springer, vol. 13(3), pages 364-377, September.
  2. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," NBER Working Papers 13932, National Bureau of Economic Research, Inc.
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Cited by:
  1. Olivier Armantier & Scott Nelson & Giorgio Topa & Wilbert van der Klaauw & Basit Zafar, 2012. "The price is right: updating of inflation expectations in a randomized price information experiment," Staff Reports 543, Federal Reserve Bank of New York.
  2. Guy Mayraz, 2011. "Wishful Thinking," CEP Discussion Papers dp1092, Centre for Economic Performance, LSE.
  3. Matthew Wiswall & Basit Zafar, 2011. "Belief updating among college students: evidence from experimental variation in information," Staff Reports 516, Federal Reserve Bank of New York.

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