Estimating bayesian decision problems with heterogeneous priors

In many areas of economics there is a growing interest in how expertise and preferences drive individual and group decision making under uncertainty. Increasingly, we wish to estimate such models to quantify which of these drive decision making. In this paper we propose a new channel through which we can empirically identify expertise and preference parameters by using variation in decisions over heterogeneous priors. Relative to existing estimation approaches, our \PriorBased Identi cation" extends the possible environments which can be estimated, and also substantially improves the accuracy and precision of estimates in those environments which can be estimated using existing methods

First Impressions Matter: Signalling as a Source of Policy Dynamics

We first establish that policymakers on the Bank of England's Monetary Policy Committee choose lower interest rates with experience. We then reject increasing confidence in private information or learning about the structure of the macroeconomy as explanations for this shift. Instead, a model in which voters signal their hawkishness to observers better fits the data. The motivation for signalling is consistent with wanting to control inflation expectations, but not career concerns or pleasing colleagues. There is also no evidence of capture by industry. The paper suggests that policy-motivated reputation building may be important for explaining dynamics in experts' policy choices.Signalling, learning, monetary policy

How Experts Decide : Identifying Preferences versus Signals from Policy Decisions

A large theoretical literature assumes that experts differ in terms of preferences and the distribution of their private signals, but the empirical literature to date has not separately identified them. This paper proposes a novel way of doing so by relating the probability a member chooses a particular policy decision to the prior belief that it is correct. We then apply this methodology to study differences between internal and external members on the Bank of England's Monetary Policy Committee. Using a variety of proxies for the prior, we provide evidence that they differ significantly on both dimensions. Key words: Bayesian decision making ; Committees ; Monetary policy JEL classification: D81 ; D82 ; E52

How Experts Decide: Identifying Preferences versus Signals from Policy Decisions

A large theoretical literature assumes that experts di ffer in terms of preferences and the distribution of their private signals, but the empirical literature to date has not separately identi ed them. This paper proposes a novel way of doing so by relating the probability a member chooses a particular policy decision to the prior belief that it is correct. We then apply this methodology to study diff erences between internal and external members on the Bank of England's Monetary Policy Committee. Using a variety of proxies for the prior, we provide evidence that they di ffer significantly on both dimensions.Bayesian decision making, committees, monetary policy

What Do Outside Experts Bring To A Committee? Evidence From The Bank of England

We test whether outside experts have information not available to insiders by using the voting record of the Bank of England's Monetary Policy Committee. Members with more private information should vote more often against conventional wisdom, which we measure as the average belief of market economists about future interest rates. We nd evidence that external members indeed have information not available to internals, but also use a quasi-natural experiment to show they may exaggerate their expertise to obtain reappointment. This implies that an optimal committee, even outside monetary policy, should potentially include outsiders, but needs to manage career concerns.Expert Behavior ; Committees ; Monetary Policy JEL Classification: D70 ; E52

True and False Foodplants of \u3ci\u3eCallosamia Promethea\u3c/i\u3e (Lepidoptera: Saturniidae) in Southern Michigan

A survey in 1980 of the associations of over 400 cocoons of Callosamia promethea Drury in vegetation along and adjacent to southern Michigan roadsides gave evidence for seven species of true larval foodplants (not including two others known in the area from other studies) and 17 species of false foodplants, the latter determined by the (1) rarity of their association with cocoons, (2) only one or two cocoons per plant, and (3) their proximity to a well known true foodplant. Three species, sassafras, black cherry, and buttonbush, are evidently the most important true foodplants in this area. Comparisons are made of the foodplants in terms of past literature, geography, and taxonomic relationships

What do outside experts bring to a committee? Evidence from the Bank of England

We test whether outside experts have information not available to insiders by using the voting record of the Bank of England's Monetary Policy Committee. Members with more private information should vote more often against conventional wisdom, which we measure as the average belief of market economists about future interest rates. We find evidence that external members indeed have information not available to internals, but also use a quasi-natural experiment to show they may exaggerate their expertise to obtain reappointment. This implies that an optimal committee, even outside monetary policy, should potentially include outsiders, but needs to manage career concerns.Expert Behavior, Committees, Monetary Policy.