%0 Report
        %A Bellemare, Charles
%A Bissonnette, Luc
%A Kröger, Sabine
        %T Flexible Approximation of Subjective Expectations Using Probability Questions: An Application to the Investment Game
        %D 2007
        %8 2007 Oct
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 3121
        %U https://www.iza.org/publications/dp3121
        %X We use spline interpolation to approximate the subjective cumulative distribution function of an economic agent over the future realization of a continuous (possibly censored) random variable. The method proposed exploits information collected using a small number of probability questions on expectations and requires a weak prior knowledge of the shape of the underlying distribution. We find that eliciting 4 or 5 points on the cumulative distribution function of an agent is sufficient to accurately approximate a wide variety of underlying distributions. We show that estimated moments of general functions of the random variable can be computed analytically and/or using standard simulation techniques. We illustrate the usefulness of the method by estimating a simple model to asses the impact of expectations on investment decisions in a commonly used trust game.
        %K decision making under uncertainty
%K approximation of subjective expectations
%K spline interpolation