The state-of-the-art in eliciting probabilistic beliefs, the Binarized Quadratic Scoring Rule (BQSR), relies on an easily overlooked preference assumption: the reduction of compound lotteries. In a lab experiment, we find evidence that a large majority of people violate the reduction assumption for at least some compound lotteries involved in the BQSR. We show that people whose preferences are consistent with reduction are 33% more likely to report accurate beliefs compared to those whose preferences are not consistent with reduction. Lastly, we implement a novel Rank-Ordered Elicitation (ROE), which does not rely on the reduction of compound lotteries, to test whether eliminating the need for reduction increases the accuracy of reported beliefs. We find no evidence for this last hypothesis, suggesting that preferences inconsistent with the reduction of compound lotteries could be proxying for other participant characteristics that affect accuracy.
Dustan, Andrew and Koutout, Kristine and Leo, Greg, Reduction in Belief Elicitation
Reduction in Belief Elicitation