Estimating Bayesian Decision Problems with Heterogeneous Priors
In many areas of economics there is a growing interest in how expertise and preferences drive individual and group decision making under uncertainty. Increasingly, we wish to estimate such models to quantify which of these drive decision making. In this paper we propose a new channel through which we can empirically identify expertise and preference parameters by using variation in decisions over heterogeneous priors. Relative to existing estimation approaches, our "Prior-Based Identification" extends the possible environments which can be estimated, and also substantially improves the accuracy and precision of estimates in those environments which can be estimated using existing methods.
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- Stephen Hansen & Carlos Velasco Rivera & Michael McMahon, 2013.
"How Experts Decide: Preferences or Private Assessments on a Monetary Policy Committee?,"
CAMA Working Papers
2013-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
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"Information acquisition and decision making in committees: a survey,"
Working Paper Series
0256, European Central Bank.
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- Matias Iaryczower & Matthew Shum, 2012. "The Value of Information in the Court: Get It Right, Keep It Tight," American Economic Review, American Economic Association, vol. 102(1), pages 202-37, February.
- Iaryczower, Matias & Lewis, Garrett & Shum, Matthew, 2013. "To elect or to appoint? Bias, information, and responsiveness of bureaucrats and politicians," Journal of Public Economics, Elsevier, vol. 97(C), pages 230-244.
- Peter Sorensen & Marco Ottaviani, 2000. "Herd Behavior and Investment: Comment," American Economic Review, American Economic Association, vol. 90(3), pages 695-704, June.
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