An experimental comparison of induced and elicited beliefs

Understanding choice under risk requires knowledge of beliefs and preferences. A variety of methods have been proposed to elicit peoples' beliefs. The efficacy of alternative methods, however, has not been rigorously documented. Herein we use an experiment to test whether an induced probability can be recovered using an elicitation mechanism based on peoples' predictions about a random event. We are unable to recover the induced belief. Instead, the estimated belief is systematically biased in a way that is consistent with anecdotal evidence in the economics, psychology, and statistics literature: people seem to overestimate low and underestimate high probabilities.