Expressible inspections

Tai Wei Hu*, Eran Shmaya

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

A decision maker needs predictions about the realization of a repeated experiment in each period. An expert provides a theory that, conditional on each finite history of outcomes, supplies a probabilistic prediction about the next outcome. However, there may be false experts who have no knowledge of the data-generating process and who deliver theories strategically. Hence, empirical tests for predictions are necessary. A test is manipulable if a false expert can pass the test with a high probability. Like contracts, tests have to be computable to be implemented. Considering only computable tests, we show that there is a test that passes true experts with a high probability yet is not manipulable by any computable strategy. In particular, the constructed test is both prequential and future-independent. Alternatively, any computable test is manipulable by a strategy that is computable relative to the halting problem. Our conclusion overturns earlier results that prequential or future-independent tests are manipulable, and shows that computability considerations have significant effects in these problems.

Original languageEnglish (US)
Pages (from-to)263-280
Number of pages18
JournalTheoretical Economics
Volume8
Issue number2
DOIs
StatePublished - May 2013

Keywords

  • Calibration tests
  • Computability
  • Expert testing
  • Zero-sum games

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Fingerprint Dive into the research topics of 'Expressible inspections'. Together they form a unique fingerprint.

Cite this