Handbook of Economic Forecasting

Chapter 12

Forecasters’ Objectives and Strategies

Iván Marinovic* and Marco Ottaviani^†,     ^*Stanford University, ^†Bocconi University

Abstract

This chapter develops a unified modeling framework for analyzing the strategic behavior of forecasters. The theoretical model encompasses reputational objectives, competition for the best accuracy, and bias. Also drawing from the extensive literature on analysts, we review the empirical evidence on strategic forecasting and illustrate how our model can be structurally estimated.

Keywords

Reputational cheap talk; Forecasting contest; Herding; Exaggeration; Bias

1 Introduction

Forecasting as a scientific enterprise has a long history, arguably dating back to the Chaldeans, the Mesopotamian astronomers ...