Aurélien Baillon

We introduce an incentive mechanism to elicit answers to binary questions that cannot be verified for accuracy. Agents choose whether to receive a costly private signal, which leads them to endorse ``yes'' or ``no'' as an answer. Then, they either buy or sell an asset, whose value is determined by the endorsement rate of ``yes'' answers. We obtain a separating equilibrium, where agents want signals and trade the asset as a function of their signal. Two experimental studies test the theoretical results. The first shows that the mechanism motivates costly information acquisition. The second demonstrates feasibility in a natural setting.