Behavioral Uncertainty and the Dynamics of Traders' Confidence in their Price Forecasts
Nobuyuki Hanaki (),
Eizo Akiyama and
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Eizo Akiyama: University of Tsukuba, Japan
No 2017-18, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis
By how much does the presence of behavioral uncertainty in an experimental asset market reduce subjects' confidence in their price forecasts? An incentivized interval forecast elicitation method is employed to answer this question. Each market consists of six traders, and the value of dividends is known. Two treatments are considered: six human traders (6H), and one human interacting with five computer traders whose behavior is known (1H5C). We find that while the deviation of the initial price forecasts from the fundamental value is significantly smaller in the 1H5C treatment than in the 6H treatment, the average confidence regarding the forecasts is not. We further analyze the relationships between subjects' confidence in their forecasts and their trading behavior, as well as their trading performance, in the 6H treatment. While subjects' high confidence in their short-term forecasts shows a negative correlation with their trading performance, high confidence in their long-term forecasts shows a positive correlation with trading performance.
Keywords: Price forecasts; interval elicitation; experimental asset markets; behavioral uncertainty (search for similar items in EconPapers)
JEL-codes: C90 D84 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2017-18.pdf First version, 2017 (application/pdf)
Journal Article: Behavioral uncertainty and the dynamics of traders’ confidence in their price forecasts (2018)
Working Paper: Behavioral uncertainty and the dynamics of traders' confidence in their price forecasts (2018)
Working Paper: Behavioral Uncertainty and the dynamics of traders' confidence in their Price forecasts (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2017-18
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