Belief Elicitation When More Than Money Matters

56 Pages Posted: 15 Aug 2019

See all articles by Jean-Pierre Benoit

Jean-Pierre Benoit

London Business School - Department of Economics

Juan Dubra

University of Montevideo - Department of Economics

Giorgia Romagnoli

CREED; Tinbergen Institute

Date Written: August 13, 2019

Abstract

Incentive compatible mechanisms for eliciting beliefs typically presume that money is the only argument in people's utility functions. However, subjects may also have non-monetary objectives that confound the mechanisms. In particular, psychologists have argued that people favour bets where their skill is involved over equivalent random bets -- a so-called preference for control. We propose a new belief elicitation method which mitigates the control preference. With the help of this method, we find that under the ostensibly incentive compatible probability matching mechanism (Grether (1981) and Karni (2009)), subjects report beliefs 7% higher than their true beliefs in order to increase their control. Non-monetary objectives account for at least 27% of what would normally be measured as overconfidence. Our paper also contributes to a refined understanding of control.

Keywords: Elicitation, Overconfidence, Control, Experimental Methods

JEL Classification: D3

Suggested Citation

Benoit, Jean-Pierre and Dubra, Juan and Romagnoli, Giorgia, Belief Elicitation When More Than Money Matters (August 13, 2019). Available at SSRN: https://ssrn.com/abstract=3437038 or http://dx.doi.org/10.2139/ssrn.3437038

Jean-Pierre Benoit

London Business School - Department of Economics ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

Juan Dubra (Contact Author)

University of Montevideo - Department of Economics ( email )

Prudencio de Pena 2440
Montevideo, CP 11600
Uruguay
5982 707 4461 (Phone)

HOME PAGE: http:\\www2.um.edu.uy\dubraj

Giorgia Romagnoli

CREED ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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