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De Finetti’s Methods of Elicitation

In: Probability and Bayesian Statistics

Author

Listed:
  • Joseph B. Kadane

    (Carnegie-Mellon University, Department of Statistics)

  • Robert L. Winkler

    (Duke University, Fuqua School of Business)

Abstract

De Finetti (1974) uses payoffs through promissory notes, bets, or scoring rules in the elicitation of an expert’s probabilities and introduces his “hypothesis of rigidity” to argue that as long as the payoffs are small, nonlinearities in the expert’s utility function can be ignored for practical purposes. In an analysis considering not just the elicitation-related payoffs, but all uncertainties related to the expert’s fortune, we find that the hypothesis of rigidity is not sufficient to eliminate the impact of the utility function in probability elicitation. We propose an “extended hypothesis of rigidity” that adds an extra condition to de Finetti’s hypothesis. The extra assumption is that, ignoring elicitation-related payoffs, the fortune of the expert is independent of the events for which probabilities are being elicited.

Suggested Citation

  • Joseph B. Kadane & Robert L. Winkler, 1987. "De Finetti’s Methods of Elicitation," Springer Books, in: R. Viertl (ed.), Probability and Bayesian Statistics, pages 279-284, Springer.
    • Handle: RePEc:spr:sprchp:978-1-4613-1885-9_29
    DOI: 10.1007/978-1-4613-1885-9_29
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