Elicitation of Subjective Probabilities: A Review.

Abstract The evidence of a need for subjective probabilities exists in the accounting literature. Control theory uses subjective probabilities. Depreciation accounting and human resource accounting need these probabilities. Confidence intervals for financial statements may be a type of subjective probability distribution. Accounting experimental researchers have obtained subjective probability responses from their subjects. Accountants, as information evaluators, must be able to express their own subjective probabilities as well as utilize the subjective probabilities of others. The purpose of this article is to explore the research that has been undertaken to obtain the available evidence concerning the theory of how to elicit subjective probabilities in order to help satisfy the expressed need. The theory and research findings will follow a brief review of the nature of probabilities. The type of elicitation techniques used and their effects, the subject's knowledge effects, the conservatism on group elicitation are presented in the sections that follow.