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Simple Belief Elicitation: an experimental evaluation

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  • Schlag, Karl
  • Tremewan, James

Abstract

We present a method for eliciting beliefs about probabilities when multiple realisations of an outcome are available, the "frequency'' method. The method is applicable for any reasonable utility function. Unlike existing techniques that account for deviations from risk-neutrality, this method is highly transparent to subjects and easy to implement. Rather than identifying point beliefs these methods identify bounds on beliefs, thus trading off precision for generality and simplicity. An experimental comparison of this method and a popular alternative, the Karni method, shows that subjects indeed find the frequency method easier to understand. Significantly, we show that confusion due to the complexity of the Karni method leads to less cognitively able subjects erroneously stating a belief of 50%, a bias not present in the frequency method.

Suggested Citation

  • Schlag, Karl & Tremewan, James, 2020. "Simple Belief Elicitation: an experimental evaluation," MPRA Paper 98187, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:98187
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    References listed on IDEAS

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    12. Karl Schlag & James Tremewan & Joël Weele, 2015. "A penny for your thoughts: a survey of methods for eliciting beliefs," Experimental Economics, Springer;Economic Science Association, vol. 18(3), pages 457-490, September.
    13. Mariana Blanco & Dirk Engelmann & Alexander Koch & Hans-Theo Normann, 2010. "Belief elicitation in experiments: is there a hedging problem?," Experimental Economics, Springer;Economic Science Association, vol. 13(4), pages 412-438, December.
    14. Theo Offerman & Joep Sonnemans & Gijs Van De Kuilen & Peter P. Wakker, 2009. "A Truth Serum for Non-Bayesians: Correcting Proper Scoring Rules for Risk Attitudes ," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(4), pages 1461-1489.
    15. Karl H.Schlag, 2015. "Who gives Direction to Statistical Testing? Best Practice meets Mathematically Correct Tests," Vienna Economics Papers 1512, University of Vienna, Department of Economics.
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    Cited by:

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    2. Ďuriník, Michal & Morita, Hodaka & Servátka, Maroš & Zhang, Le, 2023. "Promotions and Group Identity," MPRA Paper 119389, University Library of Munich, Germany.
    3. Haeckl, Simone, 2022. "Image concerns in ex-ante self-assessments–Gender differences and behavioral consequences," Labour Economics, Elsevier, vol. 76(C).
    4. Kim, Duk Gyoo & Kim, Hee Chun, 2022. "Probability matching and strategic decision making," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    5. Elias Bouacida & Renaud Foucart, 2022. "Rituals of Reason," Working Papers 344119591, Lancaster University Management School, Economics Department.
    6. Lata Gangadharan & Philip J. Grossman & Nina Xue, 2022. "Stepping Stone: Identifying self-image concerns from motivated beliefs: Does it matter how and whom you ask?," Monash Economics Working Papers 2022-05, Monash University, Department of Economics.
    7. Charness, Gary & Gneezy, Uri & Rasocha, Vlastimil, 2021. "Experimental methods: Eliciting beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 234-256.
    8. Lata Gangadharan & Philip J. Grossman & Nina Xue, 2021. "Identifying self-image concerns from motivated beliefs: Does it matter how and whom you ask?," Monash Economics Working Papers 2021-17, Monash University, Department of Economics.

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    More about this item

    Keywords

    Belief elicitation; experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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