Biased Surveys

Luca Gemmi and Rosen Valchev

No 31607, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: C53 D84 E31 E37 E70 (search for similar items in EconPapers)
Date: 2023-08
Note: EFG ME
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