Belief Elicitation with a Synchronized Lottery Choice Menu That Is Invariant to Risk Attitudes | Zendy

Charles A. Holt | Zendy; Angela M. Smith | Zendy

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Belief Elicitation with a Synchronized Lottery Choice Menu That Is Invariant to Risk Attitudes

Author(s) -

Charles A. Holt,

Angela M. Smith

Publication year - 2016

Publication title -

american economic journal microeconomics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 5.339

H-Index - 40

eISSN - 1945-7685

pISSN - 1945-7669

DOI - 10.1257/mic.20130274

Subject(s) - lottery , incentive compatibility , computer science , invariant (physics) , quadratic equation , bayesian probability , incentive , mathematical economics , econometrics , mathematics , artificial intelligence , microeconomics , statistics , economics , geometry , mathematical physics

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. (JEL C91, D44, D81, D83)

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