No abstract available.

Laboratory research has shown that both underreaction and overreaction to new information pose threats to forecasting accuracy. This article explores how real-world forecasters who vary in skill attempt to balance these threats. We distinguish among three aspects of updating: frequency, magnitude, and confirmation propensity. Drawing on data from a four-year forecasting tournament that elicited over 400,000 probabilistic predictions on almost 500 geopolitical questions, we found that the most accurate forecasters made frequent, small updates, while low-skill forecasters were prone to confirm initial judgments or make infrequent, large revisions. High-frequency updaters scored higher on crystallized intelligence and open-mindedness, accessed more information, and improved over time. Small-increment updaters had higher fluid intelligence scores, and derived their advantage from initial forecasts. Update magnitude mediated the causal effect of training on accuracy. Frequent, small revisions provided reliable and valid signals of skill. These updating patterns can help organizations identify talent for managing uncertain prospects.

We consider the design of forecasting competitions in which multiple forecasters make predictions about one or more independent events and compete for a single prize. We have two objectives: (1) to award the prize to the most accurate forecaster, and (2) to incentivize forecasters to report truthfully, so that forecasts are informative and forecasters need not spend any cognitive effort strategizing about reports. Proper scoring rules incentivize truthful reporting if all forecasters are paid according to their scores. However, incentives become distorted if only the best-scoring forecaster wins a prize, since forecasters can often increase their probability of having the highest score by reporting extreme beliefs. Even if forecasters do report truthfully, awarding the prize to the forecaster with highest score does not guarantee that high-accuracy forecasters are likely to win; in extreme cases, it can result in a perfect forecaster having zero probability of winning. In this paper, we introduce a truthful forecaster selection mechanism. We lower-bound the probability that our mechanism selects the most accurate forecaster, and give rates for how quickly this bound approaches 1 as the number of events grows. Our techniques can be generalized to the related problems of outputting a ranking over forecasters and hiring a forecaster with high accuracy on future events.

Proper scoring rules can be used to incentivize a forecaster to truthfully report her private beliefs about the probabilities of future events and to evaluate the relative accuracy of forecasters. While standard scoring rules can score forecasts only once the associated events have been resolved, many applications would benefit from instant access to proper scores. In forecast aggregation, for example, it is known that using weighted averages, where more weight is put on more accurate forecasters, outperforms simple averaging of forecasts. We introduce proxy scoring rules, which generalize proper scoring rules and, given access to an appropriate proxy, allow for immediate scoring of probabilistic forecasts. In particular, we suggest a proxy-scoring generalization of the popular quadratic scoring rule, and characterize its incentive and accuracy evaluation properties theoretically. Moreover, we thoroughly evaluate it experimentally using data from a large real world geopolitical forecasting tournament, and show that it is competitive with proper scoring rules when the number of questions is small.

Minimal peer prediction mechanisms truthfully elicit private information (e.g., opinions or experiences) from rational agents without the requirement that ground truth is eventually revealed. In this paper, we use a geometric perspective to prove that minimal peer prediction mechanisms are equivalent to power diagrams, a type of weighted Voronoi diagram. Using this characterization and results from computational geometry, we show that many of the mechanisms in the literature are unique up to affine transformations, and introduce a general method to construct new truthful mechanisms.

Agents are asked to rank two objects in a setting where effort is costly and agents differ in quality (which is the probability that they can identify the correct, ground truth, ranking). We study simple output-agreement mechanisms that pay an agent in the case she agrees with the report of another, and potentially penalizes for disagreement through a negative payment. Assuming access to a quality oracle, able to determine whether an agent's quality is above a given threshold, we design a payment scheme that aligns incentives so that agents whose quality is above this threshold participate and invest effort. Precluding negative payments leads the expected cost of this quality-oracle mechanism to increase by a factor of 2 to 5 relative to allowing both positive and negative payments. Dropping the assumption about access to a quality oracle, we further show that negative payments can be used to make agents with quality lower than the quality threshold choose to not to participate, while those above continue to participate and invest effort. Through the appropriate choice of payments, any design threshold can be achieved. This self-selection mechanism has the same expected cost as the cost-minimal quality-oracle mechanism, and thus when using the self-selection mechanism, perfect screening comes for free.

Peer prediction mechanisms allow the truthful elicitation of private signals (e.g., experiences, or opinions) in regard to a true world state when this ground truth is unobservable. The original peer prediction method is incentive compatible for any number of agents n >= 2, but relies on a common prior, shared by all agents and the mechanism. The Bayesian Truth Serum (BTS) relaxes this assumption. While BTS still assumes that agents share a common prior, this prior need not be known to the mechanism. However, BTS is only incentive compatible for a large enough number of agents, and the particular number of agents required is uncertain because it depends on this private prior. In this paper, we present a robust BTS for the elicitation of binary information which is incentive compatible for every n >= 3, taking advantage of a particularity of the quadratic scoring rule. The robust BTS is the first peer prediction mechanism to provide strict incentive compatibility for every n >= 3 without relying on knowledge of the common prior. Moreover, and in contrast to the original BTS, our mechanism is numerically robust and ex post individually rational.

Reputation mechanisms at online opinion forums, such as Amazon Reviews, elicit ratings from users about their experience with different products. Crowdsourcing applications, such as image tagging on Amazon Mechanical Turk, elicit votes from users as to whether or not a job was duly completed. An important property in both settings is that the feedback received from users (agents) is truthful. The peer prediction method introduced by Miller et al. [2005] is a prominent theoretical mechanism for the truthful elicitation of reports. However, a significant obstacle to its application is that it critically depends on the assumption of a common prior amongst both the agents and the mechanism. In this paper, we develop a peer prediction mechanism for settings where the agents hold subjective and private beliefs about the state of the world and the likelihood of a positive signal given a particular state. Our shadow peer prediction mechanism exploits temporal structure in order to elicit two reports, a belief report and then a signal report, and it provides strict incentives for truthful reporting as long as the effect an agent's signal has on her posterior belief is bounded away from zero. Alternatively, this technical requirement on beliefs can be dispensed with by a modification in which the second report is a belief report rather than a signal report.

The most prominent way to establish trust between buyers and sellers on online auction sites are reputation mechanisms. Two drawbacks of this approach are the reliance on the seller being long-lived and the susceptibility to whitewashing. In this paper, we introduce so-called escrow mechanisms that avoid these problems by installing a trusted intermediary which forwards the payment to the seller only if the buyer acknowledges that the good arrived in the promised condition. We address the incentive issues that arise and design an escrow mechanism that is incentive-compatible, efficient, interim individually rational and ex ante budget-balanced. In contrast to previous work on trust and reputation, our approach does not rely on knowing the sellers' cost functions or the distribution of buyer valuations.

The most prominent way to establish trust in online markets such as eBay are reputation systems that publish buyer feedback about a seller's past behavior. These systems, however, critically rely on assumptions that are rarely met in real-world marketplaces: first, it is assumed that there are no reporting costs and no benefits from lying so that buyers honestly report their private experiences. Second, it is assumed that every seller is long-lived, i.e. will continue to trade on the marketplace indefinitely and, third, it is assumed that sellers cannot whitewash, i.e. create new accounts once an old one is ran down. In my thesis, I address all of these assumptions and design incentive-compatible trust mechanisms that do not rely on any of the aforementioned assumptions. Moreover, I focus on designs that minimize common knowledge assumptions with respect to the players' valuations, costs and beliefs.