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Subjective beliefs formation and elicitation rules : experimental evidence

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Abstract

Since they have been increasingly used in economics, elicitation rules for subjective beliefs are under scrutiny. In this paper, we propose an experimental design to compare the performance of such rules. Contrary to previous works in which elicited beliefs are compared to an objective benchmark, we consider a pure subjective belief framework (confidence in own performance in a cognitive task and a perceptual task). The performances of elicitation rules are assessed according to the accuracy of stated beliefs in predicting success. For the perceptual task we also compare stated beliefs to Signal Detection Theory predictions. We find consistent evidence in favor of the Lottery Rule which provides more accurate beliefs and is not sensitive to risk aversion. Furthermore the Free Rule, a simple rule with no incentives, elicits relevant beliefs and even outperforms the Quadratic Scoring Rule. Beside this comparison, we propose a belief formation model where we distinguish between two stages in the beliefs : beliefs for decision making and confidence beliefs. Our results give support to this model.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 10088.

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Length: 38 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:mse:cesdoc:10088

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Keywords: Belief elicitation; confidence; signal Detection Theory; methodology; incentives; experimental economics.;

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Cited by:
  1. 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.
  2. Owens, David & Grossman , Zachary & Fackler , Ryan, 2012. "The Control Premium: A Preference for Payoff Autonomy," University of California at Santa Barbara, Economics Working Paper Series qt5bg845s1, Department of Economics, UC Santa Barbara.
  3. Noémi Berlin & Marie-Pierre Dargnies, 2012. "Linking Beliefs to Willingness to Compete," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00755660, HAL.
  4. Benoît, Jean-Pierre & Dubra, Juan & Moore, Don, 2009. "Does the Better-Than-Average Effect Show That People Are Overconfident?: Two Experiments," MPRA Paper 44956, University Library of Munich, Germany, revised 11 Mar 2013.
  5. Aurélien Baillon & Laure Cabantous & Peter Wakker, 2012. "Aggregating imprecise or conflicting beliefs: An experimental investigation using modern ambiguity theories," Journal of Risk and Uncertainty, Springer, vol. 44(2), pages 115-147, April.
  6. Trautmann, S.T. & Kuilen, G. van de, 2011. "Belief Elicitation: A Horse Race among Truth Serums," Discussion Paper 2011-117, Tilburg University, Center for Economic Research.
  7. repec:hal:journl:halshs-00755660 is not listed on IDEAS
  8. Zahra Murad & Chris Starmer & Martin Sefton, . "How do risk attitudes affect measured confidence?," Discussion Papers 2014-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  9. Noémi Berlin & Marie-Pierre Dargnies, 2012. "Linking Beliefs to Willingness to Compete," Documents de travail du Centre d'Economie de la Sorbonne 12075, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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