An Experimental Comparison of Induced and Elicited Beliefs |
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Authors: | Email author" target="_blank">Terrance?M?HurleyEmail author Jason?F?Shogren |
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Institution: | (1) Department of Applied Economics, University of Minnesota, Room 249c Classroom-Office Building, 1994 Buford Avenue, St. Paul, MN, 55108-6040;(2) Department of Economics and Finance, University of Wyoming, Laramie, WY, 82071 |
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Abstract: | Understanding choice under risk requires knowledge of beliefs and preferences. A variety of methods have been proposed to elicit peoples beliefs. The efficacy of alternative methods, however, has not been rigorously documented. Herein we use an experiment to test whether an induced probability can be recovered using an elicitation mechanism based on peoples predictions about a random event. We are unable to recover the induced belief. Instead, the estimated belief is systematically biased in a way that is consistent with anecdotal evidence in the economics, psychology, and statistics literature: people seem to overestimate low and underestimate high probabilities. |
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Keywords: | beliefs elicit induce probability risk |
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