### Abstract

We evaluate the binary lottery procedure for inducing risk neutral behavior in a subjective belief elicitation task. Harrison, Martínez-Correa and Swarthout [2013] found that the binary lottery procedure works robustly to induce risk neutrality when subjects are given one risk task defined over objective probabilities. Drawing a sample from the same subject population, we find evidence that the binary lottery procedure 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 certain Non-Expected Utility preference representations that satisfy weak conditions that we identify.

Original language | English |
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Place of Publication | Atlanta, GA |

Publisher | CEAR, Georgia State University |

Number of pages | 50 |

Publication status | Published - 2012 |

Series | Working paper / Center for Economic Analysis of Risk (CEAR) |
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Number | 2012-09 |

### Keywords

- Subjective Probability Elicitation
- Binary Lottery Procedure
- Experimental Economies
- Risk Neutrality

## Cite this

Harrison, G. W., Martínez-Correa, J., & Swarthout, J. T. (2012).

*Eliciting Subjective Probabilities with Binary Lotteries*. CEAR, Georgia State University. Working paper / Center for Economic Analysis of Risk (CEAR), No. 2012-09 http://cear.gsu.edu/wp-2012-09-eliciting-subjective-probabilities-with-binary-lotteries-by-glenn-w-harrison-jimmy-martinez-correa-and-j-todd-swarthout/