Belief elicitation in experiments: Is there a hedging problem?

Mariana Blanco, Dirk Engelmann, Alexander K. Koch, Hans Theo Normann

Resultado de la investigación: Contribución a RevistaArtículo

86 Citas (Scopus)

Resumen

Belief-elicitation experiments usually reward accuracy of stated beliefs in addition to payments for other decisions. But this allows risk-averse subjects to hedge with their stated beliefs against adverse outcomes of the other decisions. So can we trust the existing belief-elicitation results? And can we avoid potential hedging confounds? We propose an experimental design that theoretically eliminates hedging opportunities. Using this design, we test for the empirical relevance of hedging effects in the lab. Our results suggest that hedging confounds are not a major problem unless hedging opportunities are very prominent. If hedging opportunities are transparent, and incentives to hedge are strong, many subjects do spot hedging opportunities and respond to them. The bias can go beyond players actually hedging themselves, because some expect others to hedge and best respond to this. © 2010 Economic Science Association.
Idioma originalEnglish (US)
Páginas (desde-hasta)412-438
Número de páginas27
PublicaciónExperimental Economics
DOI
EstadoPublished - dic 1 2010

Huella dactilar

Hedging
Experiment
Hedge
Incentives
Risk-averse
Reward
Experimental design
Payment

Citar esto

Blanco, Mariana ; Engelmann, Dirk ; Koch, Alexander K. ; Normann, Hans Theo. / Belief elicitation in experiments: Is there a hedging problem?. En: Experimental Economics. 2010 ; pp. 412-438.
@article{94d05335b70642598a99550d1a1b0d77,
title = "Belief elicitation in experiments: Is there a hedging problem?",
abstract = "Belief-elicitation experiments usually reward accuracy of stated beliefs in addition to payments for other decisions. But this allows risk-averse subjects to hedge with their stated beliefs against adverse outcomes of the other decisions. So can we trust the existing belief-elicitation results? And can we avoid potential hedging confounds? We propose an experimental design that theoretically eliminates hedging opportunities. Using this design, we test for the empirical relevance of hedging effects in the lab. Our results suggest that hedging confounds are not a major problem unless hedging opportunities are very prominent. If hedging opportunities are transparent, and incentives to hedge are strong, many subjects do spot hedging opportunities and respond to them. The bias can go beyond players actually hedging themselves, because some expect others to hedge and best respond to this. {\circledC} 2010 Economic Science Association.",
author = "Mariana Blanco and Dirk Engelmann and Koch, {Alexander K.} and Normann, {Hans Theo}",
year = "2010",
month = "12",
day = "1",
doi = "10.1007/s10683-010-9249-1",
language = "English (US)",
pages = "412--438",
journal = "Experimental Economics",
issn = "1386-4157",
publisher = "Springer US",

}

Belief elicitation in experiments: Is there a hedging problem? / Blanco, Mariana; Engelmann, Dirk; Koch, Alexander K.; Normann, Hans Theo.

En: Experimental Economics, 01.12.2010, p. 412-438.

Resultado de la investigación: Contribución a RevistaArtículo

TY - JOUR

T1 - Belief elicitation in experiments: Is there a hedging problem?

AU - Blanco, Mariana

AU - Engelmann, Dirk

AU - Koch, Alexander K.

AU - Normann, Hans Theo

PY - 2010/12/1

Y1 - 2010/12/1

N2 - Belief-elicitation experiments usually reward accuracy of stated beliefs in addition to payments for other decisions. But this allows risk-averse subjects to hedge with their stated beliefs against adverse outcomes of the other decisions. So can we trust the existing belief-elicitation results? And can we avoid potential hedging confounds? We propose an experimental design that theoretically eliminates hedging opportunities. Using this design, we test for the empirical relevance of hedging effects in the lab. Our results suggest that hedging confounds are not a major problem unless hedging opportunities are very prominent. If hedging opportunities are transparent, and incentives to hedge are strong, many subjects do spot hedging opportunities and respond to them. The bias can go beyond players actually hedging themselves, because some expect others to hedge and best respond to this. © 2010 Economic Science Association.

AB - Belief-elicitation experiments usually reward accuracy of stated beliefs in addition to payments for other decisions. But this allows risk-averse subjects to hedge with their stated beliefs against adverse outcomes of the other decisions. So can we trust the existing belief-elicitation results? And can we avoid potential hedging confounds? We propose an experimental design that theoretically eliminates hedging opportunities. Using this design, we test for the empirical relevance of hedging effects in the lab. Our results suggest that hedging confounds are not a major problem unless hedging opportunities are very prominent. If hedging opportunities are transparent, and incentives to hedge are strong, many subjects do spot hedging opportunities and respond to them. The bias can go beyond players actually hedging themselves, because some expect others to hedge and best respond to this. © 2010 Economic Science Association.

U2 - 10.1007/s10683-010-9249-1

DO - 10.1007/s10683-010-9249-1

M3 - Article

SP - 412

EP - 438

JO - Experimental Economics

JF - Experimental Economics

SN - 1386-4157

ER -