Subjective beliefs formation and elicitation rules : experimental evidence
AbstractSince 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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Bibliographic InfoPaper 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.
Length: 38 pages
Date of creation: Nov 2010
Date of revision:
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Belief elicitation; confidence; signal Detection Theory; methodology; incentives; experimental economics.;
Other versions of this item:
- Guillaume Hollard & Sébastien Massoni & Jean-Christophe Vergnaud, 2010. "Subjective beliefs formation and elicitation rules : experimental evidence," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00543828, HAL.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-CBE-2010-11-27 (Cognitive & Behavioural Economics)
- NEP-EXP-2010-11-27 (Experimental Economics)
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- Benoît, Jean-Pierre & Dubra, Juan & Moore, Don, 2009.
"Does the Better-Than-Average Effect Show That People Are Overconfident?: Two Experiments,"
44956, University Library of Munich, Germany, revised 11 Mar 2013.
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- Noémi Berlin & Marie-Pierre Dargnies, 2012. "Linking Beliefs to Willingness to Compete," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00755660, HAL.
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- 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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