Economics research seminar: Alexandar Coutts, Schulich School of Business

Presenter

Alexandar Coutts, Schulich School of Business

Topic

Belief elicitation under ambiguity 

abstract

Beliefs play a critical role in many economic, political, and life decisions. Hence, researchers have been interested in eliciting individuals’ beliefs to better understand their decision-making processes. In recent years, researchers have developed sophisticated methods to elicit the beliefs of individuals in an incentive compatible manner. To date, much of the discussion around the incentive compatibility of these methods remains agnostic about ambiguity preferences. This is surprising in light of the fact that one could classify many beliefs elicited in experimental settings as being ambiguous. We show theoretically that the binarized scoring rule (BSR) is not incentive compatible in the presence of ambiguity, and we predict the direction of distortions. Our theory-guided experiment tests the extent to which belief reports under the BSR are distorted, and whether these distortions are in the predicted direction. The results further permit recommendations for how to elicit beliefs by varying financial stakes and simple versus complex instructions in the presence of ambiguity.