Belief Elicitation When More Than Money Matters: Controlling for "Control".

Speaker
Jean-Pierre Benoît, London Business School
Date
16/11/2021 - 13:00 - 11:30Add To Calendar 2021-11-16 11:30:00 2021-11-16 13:00:00 Belief Elicitation When More Than Money Matters: Controlling for "Control". Incentive compatible mechanisms for eliciting beliefs typically presume that the utility of money is state independent or that money is the only argument in utility functions. However, subjects may have non-monetary objectives that confound these mechanisms. In particular, psychologists have argued that people favour bets where their ability is involved over equivalent random bets -- a so-called preference for control. We propose a new belief elicitation method that mitigates the control preference. Using this method, we determine that under the ostensibly incentive compatible matching probabilities method, subjects report self-beliefs 18% higher than their true beliefs in order to increase control. Non-monetary objectives account for at least 68% of what would normally be measured as overconfidence. We also find that control manifests itself only as a desire for betting on doing well; betting on doing badly is perceived as a negative.   References: Apparent overconfidence   Does the Better-Than-Average Effect Show That People Are Overcondent?: Two Experimentsand published in JSTOR.  Belief Elicitation When More Than Money Matters: Controlling for “Control”   To view the seminar recording, click here Hybrid (BIU Economics lounge room) or Zoom (https://us02web.zoom.us/j/82536086839) אוניברסיטת בר-אילן - המחלקה לכלכלה Economics.Dept@mail.biu.ac.il Asia/Jerusalem public
Place
Hybrid (BIU Economics lounge room) or Zoom (https://us02web.zoom.us/j/82536086839)
Affiliation
https://www.london.edu/faculty-and-research/faculty-profiles/b/benoit-j
Abstract

Incentive compatible mechanisms for eliciting beliefs typically presume that the utility of money is state independent or that money is the only argument in utility functions. However, subjects may have non-monetary objectives that confound these mechanisms. In particular, psychologists have argued that people favour bets where their ability is involved over equivalent random bets -- a so-called preference for control. We propose a new belief elicitation method that mitigates the control preference. Using this method, we determine that under the ostensibly incentive compatible matching probabilities method, subjects report self-beliefs 18% higher than their true beliefs in order to increase control. Non-monetary objectives account for at least 68% of what would normally be measured as overconfidence. We also find that control manifests itself only as a desire for betting on doing well; betting on doing badly is perceived as a negative.

 

References:

  1. Apparent overconfidence
     
  2. Does the Better-Than-Average Effect Show That People Are Overcondent?: Two Experiments
    and published in JSTOR.
     
  3. Belief Elicitation When More Than Money Matters: Controlling for “Control”

 

To view the seminar recording, click here

תאריך עדכון אחרון : 22/11/2021