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Biased Surveys

Author

Listed:
  • Luca Gemmi
  • Rosen Valchev
Abstract
We find evidence suggesting that surveys of professional forecasters are biased by strategic incentives. First, we find that individual forecasts overreact to idiosyncratic information but underreact to common information. Second, we show that this bias is not present in forecasts data that is not subject to strategic incentives. We show that our evidence is consistent with a model of strategic diversification incentives in forecast reporting. Our results caution against the use of surveys of forecasts as a direct measure of expectations, as this would overestimate the likely deviations from rational expectations, the information precision and the degree of disagreement.

Suggested Citation

  • Luca Gemmi & Rosen Valchev, 2023. "Biased Surveys," NBER Working Papers 31607, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31607
    Note: EFG ME
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    More about this item

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E70 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - General

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