Eliciting belief distributions using a random two-level partitioning of the state space

Thomas de Haan ()
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Thomas de Haan: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway, https://www.uib.no/en/persons/Thomas.de.Haan

No 1/20, Working Papers in Economics from University of Bergen, Department of Economics

Abstract: I introduce a new method to incentivise the elicitation of belief distributions, the Random Partitions method. With this method, an agent’s payoff not only depends on the realised state and the elicited distribution, but also on a randomised two-level partitioning of the state-space. The method creates a binary lottery payoff structure where reports closer to an agent’s true belief distribution generate a higher probability to earn a high payout. The randomisation of the state-space partitioning ensures that the agent is incentivised to report correctly across the entire belief distribution. I compare the introduced Random Partitions method with both the well known Quadratic Scoring Rule, and a method based on the Becker-DeGroot-Marschak procedure and argue that the Random Partitions method gives substantially stronger truth-telling incentives to agents in situations where there are many states/bins.

Keywords: Belief elicitation; randomized state/event Space; partitioning; proper scoring rules. (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2020-01-06
New Economics Papers: this item is included in nep-mic
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