Open AccessSimple bets to elicit private signals
Author(s) -
Baillon Aurélien,
Xu Yan
Publication year - 2021
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te4343
Subject(s) - simple (philosophy) , crowds , private information retrieval , economics , signal (programming language) , microeconomics , homogeneous , econometrics , mathematical economics , computer science , mathematics , computer security , philosophy , epistemology , combinatorics , programming language
This paper introduces two simple betting mechanisms—top‐flop and threshold betting—to elicit unverifiable information from crowds. Agents are offered bets on the rating of an item about which they received a private signal versus that of a random item. We characterize conditions for the chosen bet to reveal the agents' private signal even if the underlying ratings are biased. We further provide microeconomic foundations of the ratings, which are endogenously determined by the actions of other agents in a game setting. Our mechanisms relax standard assumptions of the literature, such as common prior, and homogeneous and risk neutral agents.