Abstract
| Original language | English |
|---|---|
| Journal | Theory and Decision |
| Volume | 73 |
| Issue number | 1 |
| Pages (from-to) | 161-184 |
| Number of pages | 24 |
| ISSN | 0040-5833 |
| DOIs | |
| Publication status | Published - 2012 |
Keywords
- Subjective Risk
- Subjective Beliefs
- Random Coefficients
- Non-Linear Mixed Logit
- Experiments
Cite this
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Inferring Beliefs as Subjectively Imprecise Probabilities. / Andersen, Steffen; Fountain, John; Harrison, Glenn W.; Hole, Arna Risa; Rutström, E. Elisabeth.
In: Theory and Decision, Vol. 73, No. 1, 2012, p. 161-184.Research output: Contribution to journal › Journal article › Research › peer-review
TY - JOUR
T1 - Inferring Beliefs as Subjectively Imprecise Probabilities
AU - Andersen, Steffen
AU - Fountain, John
AU - Harrison, Glenn W.
AU - Hole, Arna Risa
AU - Rutström, E. Elisabeth
N1 - Published online 19 July 2011
PY - 2012
Y1 - 2012
N2 - We propose a method for estimating subjective beliefs, viewed as a subjective probability distribution. The key insight is to characterize beliefs as a parameter to be estimated from observed choices in a well-defined experimental task and to estimate that parameter as a random coefficient. The experimental task consists of a series of standard lottery choices in which the subject is assumed to use conventional risk attitudes to select one lottery or the other and then a series of betting choices in which the subject is presented with a range of bookies offering odds on the outcome of some event that the subject has a belief over. Knowledge of the risk attitudes of subjects conditions the inferences about subjective beliefs. Maximum simulated likelihood methods are used to estimate a structural model in which subjects employ subjective beliefs to make bets. We present evidence that some subjective probabilities are indeed best characterized as probability distributions with non-zero variance.
AB - We propose a method for estimating subjective beliefs, viewed as a subjective probability distribution. The key insight is to characterize beliefs as a parameter to be estimated from observed choices in a well-defined experimental task and to estimate that parameter as a random coefficient. The experimental task consists of a series of standard lottery choices in which the subject is assumed to use conventional risk attitudes to select one lottery or the other and then a series of betting choices in which the subject is presented with a range of bookies offering odds on the outcome of some event that the subject has a belief over. Knowledge of the risk attitudes of subjects conditions the inferences about subjective beliefs. Maximum simulated likelihood methods are used to estimate a structural model in which subjects employ subjective beliefs to make bets. We present evidence that some subjective probabilities are indeed best characterized as probability distributions with non-zero variance.
KW - Subjective Risk
KW - Subjective Beliefs
KW - Random Coefficients
KW - Non-Linear Mixed Logit
KW - Experiments
U2 - 10.1007/s11238-011-9276-1
DO - 10.1007/s11238-011-9276-1
M3 - Journal article
VL - 73
SP - 161
EP - 184
JO - Theory and Decision
JF - Theory and Decision
SN - 0040-5833
IS - 1
ER -