Belief Elicitation: A Horse Race among Truth Serums

In survey studies, probabilistic expectations about uncertain events are typically elicited by asking respondents for their introspective beliefs. If more complex procedures are feasible, beliefs can be elicited by incentive compatible revealed preference mechanisms (“truth serums”). Various mechanisms have been proposed in the literature, which differ in the degree to which they account for respondents’ deviations from expected value maximization. In this paper, we pit non-incentivized introspection against five truth serums, to elicit beliefs in a simple two-player game. We test the internal validity (additivity and predictive power for own behavior), and the external validity (predictive power for other players’ behavior, or accuracy) of each method. We find no differences among the truth serums. Beliefs from incentivized methods are better predictors of subjects’ own behavior compared to introspection. However, introspection performs equally well as the truth serums in terms of accuracy and additivity.belief measurement;subjective probability;scoring rules;outcome matching;probability matching;internal validity;external validity

The HIV Anticaptory Saving Motive: An Empirical Analysis in South Africa

This paper studies the effect of the HIV/AIDS epidemic on saving behaviour. Two important characteristics of HIV result in opposing forces on savings: mortality increases, which reduces savings, and long-term illness risk increases, which enhances savings. We use a two period life-cycle model with uncertain lifetime including perceived HIV contamination risk to illustrate both the opposing effects of the HIV epidemic on individual savings and test the predictions of our model with data obtained from an economic experiment with real monetary incentives performed in South Africa. The empirical results show that increased mortality decreases the amount of savings and that having a high perception of HIV contamination risk increases savings. The latter effect confirms the HIV anticipatory saving hypothesis.HIV/AIDS;saving behavior;illness risk;mortality;life-cycle model;time preferences

Higher Order Risk Attitudes, Demographics, and Financial Decisions

We conduct an experiment to study the prevalence of the higher order risk attitudes of prudence and temperance, in a large demographically representative sample, as well as in a sample of undergraduate students. Participants make pairwise choices between lotteries of the form proposed by Eeckhoudt and Schlesinger (2006). The choices in these lotteries isolate prudent from imprudent, and temperate from intemperate, behavior. We relate individuals’ risk aversion, prudence, and temperance levels to demographics and financial decisions. We observe that the majority of individuals’ decisions are consistent with risk aversion, prudence, and temperance, in both the student and the demographically representative sample. An individual’s level of prudence is predictive of his wealth, saving, and borrowing behavior outside of the experiment, while temperance predicts the riskiness of portfolio choices. Our findings suggest that the coefficient of relative prudence for a representative individual is approximately equal to two.prudence;temperance;saving;portfolio choice;experiment

The HIV Anticaptory Saving Motive:An Empirical Analysis in South Africa

This paper studies the effect of the HIV/AIDS epidemic on saving behaviour. Two important characteristics of HIV result in opposing forces on savings: mortality increases, which reduces savings, and long-term illness risk increases, which enhances savings. We use a two period life-cycle model with uncertain lifetime including perceived HIV contamination risk to illustrate both the opposing effects of the HIV epidemic on individual savings and test the predictions of our model with data obtained from an economic experiment with real monetary incentives performed in South Africa. The empirical results show that increased mortality decreases the amount of savings and that having a high perception of HIV contamination risk increases savings. The latter effect confirms the HIV anticipatory saving hypothesis

The midweight method to measure attitudes towards risk and ambiguity

This paper introduces a parameter-free method for measuring the weighting functions of prospect theory and rank-dependent utility. These weighting functions capture risk attitudes, subjective beliefs, and ambiguity attitudes. Our method, called the midweight method, is based on a convenient way to obtain midpoints in the weighting function scale. It can be used both for risk (known probabilities) and for uncertainty (unknown probabilities). The resulting integrated treatment of risk and uncertainty is particularly useful for measuring ambiguity, i.e., the difference between uncertainty and risk. Compared to existing methods to measure weighting functions and attitudes toward uncertainty and ambiguity, our method is more efficient and can accommodate violations of expected utility under risk. An experiment demonstrates the tractability of our method, yielding plausible results such as ambiguity aversion for moderate and high likelihoods but ambiguity seeking for low likelihoods, as predicted by Ellsberg

Belief Elicitation:A Horse Race among Truth Serums

In survey studies, probabilistic expectations about uncertain events are typically elicited by asking respondents for their introspective beliefs. If more complex procedures are feasible, beliefs can be elicited by incentive compatible revealed preference mechanisms (“truth serums”). Various mechanisms have been proposed in the literature, which differ in the degree to which they account for respondents’ deviations from expected value maximization. In this paper, we pit non-incentivized introspection against five truth serums, to elicit beliefs in a simple two-player game. We test the internal validity (additivity and predictive power for own behavior), and the external validity (predictive power for other players’ behavior, or accuracy) of each method. We find no differences among the truth serums. Beliefs from incentivized methods are better predictors of subjects’ own behavior compared to introspection. However, introspection performs equally well as the truth serums in terms of accuracy and additivity

The Midweight Method to Measure Attitudes towards Risk and Ambiguity

This paper introduces a parameter-free method for measuring the weighting functions of prospect theory and rank-dependent utility. These weighting functions capture risk attitudes, subjective beliefs, and ambiguity attitudes. Our method, called the midweight method, is based on a convenient way to obtain midpoints in the weighting function scale. It can be used both for risk (known probabilities) and for uncertainty (unknown probabilities). The resulting integrated treatment of risk and uncertainty is particularly useful for measuring the differences between them: ambiguity. Compared to existing methods to measure ambiguity attitudes, our method is more efficient and it can accommodate violations of expected utility under risk. An experiment demonstrates the feasibility and tractability of our method, yielding plausible results such as ambiguity aversion for moderate and high likelihoods but ambiguity seeking for low likelihoods, as predicted by Ellsberg

Mechanical properties of azobé (Lophira alata)

The use of tropical hardwoods in structural applications requires knowledge of the mechanical properties. Even though long experience is available with the species azobé (Lophira alata), much of the current knowledge is based on tests performed on small clear specimens for bending, compression and shear. Since tropical hardwoods are used in structures with high economic value, a sound knowledge of the mechanical properties allows for better optimisation and for minimal use of raw material. Bending, compression and shear tests have been performed on material in structural sizes. Characteristic values show that in most loading cases the structural capacity of the material is distinctly higher than currently assumed in practice. The relationship between static modulus of elasticity and bending strength has been determined. The depth effect was shown to be less pronounced than for softwoods