Eliciting Forecasts from Self-interested Experts: Scoring Rules for Decision Makers

Scoring rules for eliciting expert predictions of random variables are usually developed assuming that experts derive utility only from the quality of their predictions (e.g., score awarded by the rule, or payoff in a prediction market). We study a more realistic setting in which (a) the principal is a decision maker and will take a decision based on the expert’s prediction; and (b) the expert has an inherent interest in the decision. For example, in a corporate decision market, the expert may derive different levels of utility from the actions taken by her manager. As a consequence the expert will usually have an incentive to misreport her forecast to influence the choice of the decision maker if typical scoring rules are used. We develop a general model for this setting and introduce the concept of a compensation rule. When combined with the expert’s inherent utility for decisions, a compensation rule induces a net scoring rule that behaves like a normal scoring rule. Assuming ...

• Type: Journal
• Year: 2011
• Where: CORR
• Authors: Craig Boutilier
• Keywords: Compensation Rules, CORR 2011, Decision Maker, Education, Experts