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Markets for Theories

Author

Listed:
  • Aurélien Baillon

    (EM - EMLyon Business School, GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - UJM EPE - Université Jean Monnet (EPSCPE) - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique)

  • Aysil Emirmahmutoglu

    (NHH - Norwegian School of Economics and Business Administration)

  • Benjamin Tereick
  • Tong V. Wang

Abstract

How much is a theory worth? We provide the first measure of the credence people assign to a theory, inferred from their willingness to bet on it. We introduce two market mechanisms: in an explicit theory market, a theory is priced as a portfolio of bets on the hypotheses it predicts; in an implicit theory market, traders report a credence directly and are matched with others reporting similar credences, with payoffs tied to the hypothesis-market behavior of the match. What the implicit mechanism elicits is invariant to which hypotheses happen to be testable. We demonstrate feasibility by implementing both mechanisms in a mobile-app experiment built around the real-effort study of DellaVigna and Pope (2018b). Theory-market prices reflect the relative restrictiveness of the four theories considered, and the two mechanisms produce broadly comparable measures of theory credence.

Suggested Citation

  • Aurélien Baillon & Aysil Emirmahmutoglu & Benjamin Tereick & Tong V. Wang, 2026. "Markets for Theories," Working Papers hal-05720004, HAL.
    • Handle: RePEc:hal:wpaper:hal-05720004
    Note: View the original document on HAL open archive server: https://hal.science/hal-05720004v1
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