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Bayes Factors with an Application to Experimental Economics

Published online by Cambridge University Press:  14 March 2025

Gary E. Bolton*
Affiliation:
Smeal College of Business Administration, The Pennsylvania State University, University Park, PA 16802, USA
Paul L. Mosquin
Affiliation:
Department of Statistics, The Pennsylvania State University, University Park, PA 16802, USA
Duncan K.H. Fong
Affiliation:
Smeal College of Business Administration, The Pennsylvania State University, University Park, PA 16802, USA

Abstract

We describe Bayes factor, an explicit measure of the strength of the evidence, the extent to which the data increase or decrease the odds a given hypothesis or model is true. Issues and techniques for deriving a Bayes factor are outlined. We illustrate the technique with data from an ultimatum game experiment that looked for an experimenter observation effect. We show that the evidence increases the odds of an effect, but not by enough to convince someone with a skeptical prior.

Type
Research Article
Copyright
Copyright © 2003 Economic Science Association

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Footnotes

*

Author to whom correspondence should be addressed.

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