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Eliciting Beliefs

Author

Listed:
  • Andersen, Steffen

    () (Department of Economics, Copenhagen Business School)

  • Fountain, John
  • Harrison, Glenn W.
  • Rutström, Elisabet

Abstract

Subjective beliefs play a role in many economic decisions. There is a large theoretical literature on the elicitation of beliefs, and an equally large empirical literature. However, there is a gulf between the two. The theoretical literature proposes a range of procedures that can be used to recover beliefs, but stresses the need to make strong auxiliary assumptions or “calibrating adjustments” to elicited reports in order to recover the latent belief. With some notable exceptions, the empirical literature seems intent on either making those strong assumptions or ignoring the need for calibration. We make three contributions to bridge this gulf. First, we offer a general theoretical framework in which the belief elicitation task can be viewed as an exchange of state-dependent commodities between two traders. Second, we provide a specific elicitation procedure which has clear counterparts in field betting environments, and that is directly motivated by our theoretical framework. Finally, we illustrate how one can jointly estimate risk attitudes and subjective beliefs using structural maximum likelihood methods. This allows the observer to make inferences about the latent subjective belief, calibrating for virtually any well-specified model of choice under uncertainty. We demonstrate our procedures with an experiment in which we elicit subjective probabilities over three future events and one fact.

Suggested Citation

  • Andersen, Steffen & Fountain, John & Harrison, Glenn W. & Rutström, Elisabet, 2009. "Eliciting Beliefs," Working Papers 03-2009, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2009_003
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    Citations

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    Cited by:

    1. Nagore Iriberri & Pedro Rey‐Biel, 2013. "Elicited beliefs and social information in modified dictator games: What do dictators believe other dictators do?," Quantitative Economics, Econometric Society, vol. 4(3), pages 515-547, November.
    2. Dufwenberg, Martin & Gächter, Simon & Hennig-Schmidt, Heike, 2011. "The framing of games and the psychology of play," Games and Economic Behavior, Elsevier, vol. 73(2), pages 459-478.
    3. Martin Dufwenberg & Simon Gaechter & Heike Hennig-Schmidt, 2006. "The Framing of Games and the Psychology of Strategic Choice," Discussion Papers 2006-20, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    4. Simon Gächter & Elke Renner, 2010. "The effects of (incentivized) belief elicitation in public goods experiments," Experimental Economics, Springer;Economic Science Association, vol. 13(3), pages 364-377, September.
    5. Charness, Gary B & Dufwenberg, Martin, 2008. "Broken Promises: An Experiment," University of California at Santa Barbara, Economics Working Paper Series qt6836m74q, Department of Economics, UC Santa Barbara.
    6. Gijs van de Kuilen & Peter P. Wakker, 2011. "The Midweight Method to Measure Attitudes Toward Risk and Ambiguity," Management Science, INFORMS, vol. 57(3), pages 582-598, March.
    7. Rutstrom, E. Elizabet & Wilcox, Nathaniel, 2008. "Stated versus inferred beliefs: A methodological inquiry and experimental test," MPRA Paper 11852, University Library of Munich, Germany.

    More about this item

    Keywords

    probability; beliefs;

    JEL classification:

    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General

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