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Forecasts of relative performance in tournaments: evidence from the field

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  • Santos-Pinto, Luís
  • Park, Young-Joon

Abstract

This paper uses a field experiment to investigate the quality of individuals' forecasts of relative performance in tournaments. We ask players in luck-based (poker) and skill-based (chess) tournaments to make point forecasts of rank. The main finding of the paper is that players' forecasts in both types of tournaments are biased towards overestimation of relative performance. However, the size of the biases found is not as large as the ones often reported in the psychology literature. We also find support for the "unskilled and unaware hypothesis" in chess: high skilled chess players make better forecasts than low skilled chess players. Finally, we find that chess players' forecasts of relative performance are not efficient.

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File URL: http://mpra.ub.uni-muenchen.de/3144/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3144.

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Date of creation: 05 Jun 2004
Date of revision: 22 Mar 2007
Handle: RePEc:pra:mprapa:3144

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Related research

Keywords: Tournaments; Rationality; Field Experiment;

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References

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  1. Camerer, Colin F & Hogarth, Robin M, 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Journal of Risk and Uncertainty, Springer, Springer, vol. 19(1-3), pages 7-42, December.
  2. Simon Gervais & Terrance Odean, . "Learning To Be Overconfident," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 05-97, Wharton School Rodney L. White Center for Financial Research.
  3. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, American Economic Association, vol. 89(1), pages 306-318, March.
  4. Basu, Sudipta & Markov, Stanimir, 2004. "Loss function assumptions in rational expectations tests on financial analysts' earnings forecasts," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 38(1), pages 171-203, December.
  5. Eric Van den Steen, 2004. "Rational Overoptimism (and Other Biases)," American Economic Review, American Economic Association, American Economic Association, vol. 94(4), pages 1141-1151, September.
  6. Selten, Reinhard & Abdolkarim Sadrieh & Klaus Abbink, 1995. "Money does Not Induce Risk Neutral Behavior, but Binary Lotteries Do even Worse," Discussion Paper Serie B, University of Bonn, Germany 343, University of Bonn, Germany.
  7. Smith, Vernon L & Walker, James M, 1993. "Rewards, Experience and Decision Costs in First Price Auctions," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 31(2), pages 237-45, April.
  8. Chen, Zhaohui & Giovannini, Alberto, 1992. "Target zones and the distribution of exchange rates: An estimation method," Economics Letters, Elsevier, Elsevier, vol. 40(1), pages 83-89, September.
  9. Lu�s Santos-Pinto & Joel Sobel, 2005. "A Model of Positive Self-Image in Subjective Assessments," American Economic Review, American Economic Association, American Economic Association, vol. 95(5), pages 1386-1402, December.
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Citations

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Cited by:
  1. Luís Santos-Pinto, 2010. "Positive Self-Image In Tournaments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 475-496, 05.
  2. repec:hal:journl:halshs-00272928 is not listed on IDEAS
  3. Nicolas Jacquemet & Jean-Louis Rullière & Isabelle Vialle, 2008. "Monitoring optimistic agents," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00272928, HAL.
  4. Pinto, Luis Santos, 2007. "Positive Self-Image over Time?," FEUNL Working Paper Series wp504, Universidade Nova de Lisboa, Faculdade de Economia.
  5. Luís Santos-Pinto, 2006. "Positive Self-Image over Time," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP), Université de Lausanne, Faculté des HEC, DEEP 09.02, Université de Lausanne, Faculté des HEC, DEEP.

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