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De Finetti’s Methods of Elicitation

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Probability and Bayesian Statistics

Abstract

De Finetti (1974) uses payoffs through promissory notes, bets, or scoring rules in the elicitation of an expert’s probabilities and introduces his “hypothesis of rigidity” to argue that as long as the payoffs are small, nonlinearities in the expert’s utility function can be ignored for practical purposes. In an analysis considering not just the elicitation-related payoffs, but all uncertainties related to the expert’s fortune, we find that the hypothesis of rigidity is not sufficient to eliminate the impact of the utility function in probability elicitation. We propose an “extended hypothesis of rigidity” that adds an extra condition to de Finetti’s hypothesis. The extra assumption is that, ignoring elicitation-related payoffs, the fortune of the expert is independent of the events for which probabilities are being elicited.

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References

  • de Finetti, B., 1974, “Theory of Probability,” Vol. 1, Wiley, New York.

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  • Kadane, J.B., and Winkler, R.L., 1986, Separating probability elicitation from utilities, unpublished manuscript.

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  • Pratt, J.W., 1964, Risk aversion in the small and in the large, Econo-metrica, 32: 122–136.

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  • Ramsey, F.P., 1931, “The Foundations of Mathematics and Other Logical Essays,” Kegan Paul, London.

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Author information

Authors and Affiliations

  1. Department of Statistics, Carnegie-Mellon University, Pittsburgh, PA, 15213, USA

    Joseph B. Kadane

  2. Fuqua School of Business, Duke University, Durham, NC, 27706, USA

    Robert L. Winkler

Authors
  1. Joseph B. Kadane
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  2. Robert L. Winkler
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Editor information

Editors and Affiliations

  1. Technical University of Vienna, Vienna, Austria

    R. Viertl

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© 1987 Plenum Press, New York

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Kadane, J.B., Winkler, R.L. (1987). De Finetti’s Methods of Elicitation. In: Viertl, R. (eds) Probability and Bayesian Statistics. Springer, Boston, MA. https://doi.org/10.1007/978-1-4613-1885-9_29

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  • DOI: https://doi.org/10.1007/978-1-4613-1885-9_29

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-1-4612-9050-6

  • Online ISBN: 978-1-4613-1885-9

  • eBook Packages: Springer Book Archive

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