Eliciting and estimating valid subjective probabilities: An experimental investigation of the exchangeability method

B-Tier
Journal: Journal of Economic Behavior and Organization
Year: 2012
Volume: 84
Issue: 1
Pages: 201-215

Authors (3)

Cerroni, Simone (not in RePEc) Notaro, Sandra (not in RePEc) Shaw, W. Douglass (Texas A&M University)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Using a laboratory experiment, we investigate whether incentive compatibility affects subjective probabilities elicited via the exchangeability method (EM), an elicitation technique consisting of several chained questions. We hypothesize that subjects who are aware of the chaining strategically behave and provide invalid subjective probabilities, while subjects who are not aware of the chaining state their real beliefs and provide valid subjective probabilities. The validity of subjective probabilities is investigated using de Finetti's notion of coherence, under which probability estimates are valid if and only if they obey all axioms of probability theory.

Technical Details

RePEc Handle
repec:eee:jeborg:v:84:y:2012:i:1:p:201-215
Journal Field
Theory
Author Count
3
Added to Database
2026-01-29