Belief Elicitation with Binary Outcomes: A Comparison of Quadratic and Binarized Scoring Rules

40 Pages Posted: 14 Feb 2020 Last revised: 29 Jun 2020

See all articles by Nisvan Erkal

Nisvan Erkal

University of Melbourne - Faculty of Business and Economics

Lata Gangadharan

Monash University

Boon Han Koh

University of East Anglia (UEA) - School of Economics

Date Written: January 20, 2020

Abstract

It is becoming increasingly common for researchers to elicit individuals’ beliefs in controlled experiments to understand the underlying motivations of decision makers. We evaluate the performance of the quadratic scoring rule (QSR) and the binarized scoring rule (BSR) in an environment where subjects report probabilistic beliefs over binary outcomes when the probabilities are objectively known to them. We find that reported beliefs are less accurate under the QSR than the BSR at the aggregate level. Consistent with theoretical predictions, risk-averse subjects tend to distort their reported beliefs under the QSR.

Keywords: Belief elicitation, Risk preferences, Experimental methodology, Scoring rules, Prediction accuracy

JEL Classification: C91, D81, D83

Suggested Citation

Erkal, Nisvan and Gangadharan, Lata and Koh, Boon Han, Belief Elicitation with Binary Outcomes: A Comparison of Quadratic and Binarized Scoring Rules (January 20, 2020). Available at SSRN: https://ssrn.com/abstract=3523222 or http://dx.doi.org/10.2139/ssrn.3523222

Nisvan Erkal (Contact Author)

University of Melbourne - Faculty of Business and Economics ( email )

Victoria, 3010
Australia
+61 3 8344 3307 (Phone)
+61 3 8344 6899 (Fax)

HOME PAGE: http://www.nisvanerkal.net

Lata Gangadharan

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Boon Han Koh

University of East Anglia (UEA) - School of Economics ( email )

3.06, Registry
University of East Anglia
Norwich, NR4 7TJ
United Kingdom

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