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Effects of Eliciting Long-run Price Forecasts on Market Dynamics in Asset Market Experiments

Author

Listed:
  • Nobuyuki Hanaki

    (Université Nice Sophia Antipolis
    GREDEG-CNRS
    IUF)

  • Eizo Akiyama

    (University of Tsukuba, Japan)

  • Ryuichiro Ishikawa

    (University of Tsukuba, Japan)

Abstract

In this study, we investigate (a) whether eliciting future price forecasts influences market outcomes and (b) whether differences in the way in which subjects are incentivized to submit ``accurate'' price forecasts influence market outcomes as well as the forecasts in an experimental asset market. We consider four treatments: one without forecast elicitation and three with forecast elicitation. In two of the treatments with forecast elicitation, subjects are paid based on their performance in both forecasting and trading, while in the other treatment with forecast elicitations, they are paid based on only one of those factors, which is chosen randomly at the end of the experiment. We found no significant effect of forecast elicitation on market outcomes in the latter case. Thus, to avoid influencing the behavior of subjects and market outcomes by eliciting price forecasts, paying subjects based on either forecasting or trading performance is better than paying them based on both.

Suggested Citation

  • Nobuyuki Hanaki & Eizo Akiyama & Ryuichiro Ishikawa, 2017. "Effects of Eliciting Long-run Price Forecasts on Market Dynamics in Asset Market Experiments," GREDEG Working Papers 2017-26, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  • Handle: RePEc:gre:wpaper:2017-26
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    References listed on IDEAS

    as
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    Cited by:

    1. Nobuyuki Hanaki & Eizo Akiyama & Ryuichiro Ishikawa, 2018. "Behavioral uncertainty and the dynamics of traders' confidence in their price forecasts ," Post-Print hal-01712301, HAL.
    2. Annarita Colasante & Simone Alfarano & Eva Camacho-Cuena & Mauro Gallegati, 2017. "Long-run expectations in a Learning-to-Forecast Experiment: A Simulation Approach," Working Papers 2017/03, Economics Department, Universitat Jaume I, Castellón (Spain).

    More about this item

    Keywords

    Price forecast elicitation; Experimental asset markets;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics

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