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Title:Belief elicitation in experiments: is there a hedging problem? PDF Logo
Authors:Blanco, Mariana
Engelmann, Dirk
Koch, Alexander K.
Normann, Hans-Theo
Issue Date:2008
Series/Report no.:IZA Discussion Papers 3517
Abstract:Belief elicitation in economics experiments usually relies on paying subjects according to the accuracy of stated beliefs in addition to payments for other decisions. Such incentives, however, allow risk-averse subjects to hedge with their stated beliefs against adverse outcomes of other decisions in the experiment. This raises two questions: (i) can we trust the existing belief elicitation results, (ii) can we avoid potential hedging confounds? Our results instill confidence regarding both issues. We propose an experimental design that eliminates hedging opportunities, and use this to test for the empirical relevance of hedging effects in the lab. We find no evidence for hedging, comparing the standard hedging-prone” belief elicitation treatment to a hedging-proof” design in a sequential prisoners´ dilemma game. Our findings are strengthened by the absence of hedging even in an additional non-belief elicitation treatment using a financial investment frame, where hedging arguably would be most natural.
Subjects:Belief elicitation
hedging
methods
experimental economics
JEL:C72
Persistent Identifier of the first edition:urn:nbn:de:101:1-20080605121
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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