Eliciting Subjective Probabilities with Binary Lotteries

Glenn W. Harrison, Jimmy Martínez-Correa, J. Todd Swarthout

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

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.
Original languageEnglish
JournalJournal of Economic Behavior & Organization
Volume101
Pages (from-to)128-140
ISSN0167-2681
DOIs
Publication statusPublished - May 2014

Cite this

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title = "Eliciting Subjective Probabilities with Binary Lotteries",
abstract = "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.",
keywords = "Subjective probability elicitation, Binary lottery procedure, Experimental economics, Risk neutrality",
author = "Harrison, {Glenn W.} and Jimmy Mart{\'i}nez-Correa and Swarthout, {J. Todd}",
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language = "English",
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Eliciting Subjective Probabilities with Binary Lotteries. / Harrison, Glenn W.; Martínez-Correa, Jimmy; Swarthout, J. Todd.

In: Journal of Economic Behavior & Organization, Vol. 101, 05.2014, p. 128-140.

Research output: Contribution to journalJournal articleResearchpeer-review

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