Simple bets to elicit private signals
This paper introduces simple bets to reveal unverifiable signals of agents. In the first part of the paper, the bets are defined on exogenous ’scores’. For instance, people are asked to bet whether they think a given movie will get higher ratings than another, random movie. The chosen bet reveals whether people themselves liked the movie. We call this method top-flop betting. Another method, target betting, let the agents bet on which item will reach a target performance. In the second part, we provide a game setting, in which the scores underlying the bets are endogenously determined by the actions of other agents. This establishes microeconomic foundations for the scores. Unlike most results from the literature, our mechanisms require agents neither to be risk neutral nor to have a common prior about others’ signals.