We evaluate a binary lottery procedure for inducing risk neutral behavior in a subjective belief elicitation task. Prior research has shown this procedure to robustly induce risk neutrality when subjects are given a single risk task defined over objective probabilities. Drawing a sample from the same subject population, we find evidence that the binary lottery procedure also induces linear utility in a subjective probability elicitation task using the Quadratic Scoring Rule. We also show that the binary lottery procedure can induce direct revelation of subjective probabilities in subjects with popular non-expected utility preference representations that satisfy weak conditions.
- Subjective probability elicitation
- Binary lottery procedure
- Experimental economics
- Risk neutrality
Harrison, G. W., Martínez-Correa, J., & Swarthout, J. T. (2014). Eliciting Subjective Probabilities with Binary Lotteries. Journal of Economic Behavior & Organization, 101, 128-140. https://doi.org/10.1016/j.jebo.2014.02.011