Item Details

Belief Elicitation with a Synchronized Lottery Choice Menu that is Invariant to Risk Attitudes

Holt, Charles
Format
Article
Author
Holt, Charles
Contributor
Holt, Charles
Abstract
Belief Elicitation with a Synchronized Lottery Choice Menu that is Invariant to Risk Attitudes By Charles A. Holt and Angela M. Smith This paper uses a Bayesian information processing task to compare belief elicitation mechanisms including a quadratic scoring rule, a Becker-DeGroot-Marschak pricing procedure, and a two-stage menu of lottery choices that is structured to identify a precise point of probability indifference. The choice menu yields a higher incidence of correct Bayesian responses and lower belief error averages. Unlike the quadratic scoring rule, the binary payoffs for the lottery choice mechanism are synchronized to provide theoretical incentive-compatibility regardless of risk attitudes. In addition, the choice menu structure is more transparent and intuitive than the Becker-DeGroot-Marschak procedure.
Language
English
Published
University of Virginia, 2016
Published Date
2016
Collection
Libra Open Repository
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