Forecast dispersion in finite-player forecasting games

Jin Yeub Kim, Myungkyu Shim

Research output: Contribution to journalArticle

Abstract

We study forecast dispersion in a finite-player forecasting game modeled as an aggregate game with payoff externalities and dispersed information. In the game, each agent cares about being accurate as well as about the distance of his forecast from the average forecast; and with a finite number of agents, the agents can strategically influence that average. We show that the finiteness of the number of agents weakens the strategic effect induced by the underlying preference. We find that when each agent prefers to be close to the average forecast, the presence of strategic manipulation of the average forecast contributes to a higher forecast dispersion; when instead each agent wants to be distinctive from the average, the opposite is true.

Original languageEnglish
Article number20170023
JournalB.E. Journal of Theoretical Economics
Volume19
Issue number1
DOIs
Publication statusPublished - 2019 Jan 1

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Forecast dispersion
Externalities
Strategic effect
Manipulation

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

Cite this

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Forecast dispersion in finite-player forecasting games. / Kim, Jin Yeub; Shim, Myungkyu.

In: B.E. Journal of Theoretical Economics, Vol. 19, No. 1, 20170023, 01.01.2019.

Research output: Contribution to journalArticle

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