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Compressed Beliefs

Author

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  • Zihlmann, Christian

Abstract

Subjective beliefs are central to economic inference, and incentive-compatible belief elicitation mechanisms are widely assumed to identify these latent objects. This paper shows that elicited belief reports causally depend on an uninformative cognitive default induced by the elicitation design. From the lab to sports betting to official inflation expectations, reported beliefs are highly malleable, even under theoretically and behaviorally compatible incentives. I propose experimentally varying the cognitive default during belief elicitation. This exogenous variation allows the construction of inferred beliefs that are stable across elicitation designs and empirically outperform incentivized reports in predicting realized outcomes and participants’ own behavior.

Suggested Citation

  • Zihlmann, Christian, 2026. "Compressed Beliefs," FSES Working Papers 544, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    • Handle: RePEc:fri:fribow:fribow00544
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    Keywords

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    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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