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Forecasts of relative performance in tournaments: evidence from the field

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

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/3144/1/MPRA_paper_3144.pdf
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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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  1. Gervais, Simon & Odean, Terrance, 2001. "Learning to be Overconfident," Review of Financial Studies, Society for Financial Studies, vol. 14(1), pages 1-27.
  2. Reinhard Selten & Abdolkarim Sadrieh & Klaus Abbink, 1999. "Money Does Not Induce Risk Neutral Behavior, but Binary Lotteries Do even Worse," Theory and Decision, Springer, vol. 46(3), pages 213-252, June.
  3. Lu�s Santos-Pinto & Joel Sobel, 2005. "A Model of Positive Self-Image in Subjective Assessments," American Economic Review, American Economic Association, vol. 95(5), pages 1386-1402, December.
  4. Camerer, Colin F. & Hogarth, Robin M., 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Working Papers 1059, California Institute of Technology, Division of the Humanities and Social Sciences.
  5. Basu, Sudipta & Markov, Stanimir, 2004. "Loss function assumptions in rational expectations tests on financial analysts' earnings forecasts," Journal of Accounting and Economics, Elsevier, vol. 38(1), pages 171-203, December.
  6. Chen, Zhaohui & Giovannini, Alberto, 1992. "Target zones and the distribution of exchange rates: An estimation method," Economics Letters, Elsevier, vol. 40(1), pages 83-89, September.
  7. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
  8. Eric Van den Steen, 2004. "Rational Overoptimism (and Other Biases)," American Economic Review, American Economic Association, vol. 94(4), pages 1141-1151, September.
  9. Smith, Vernon L & Walker, James M, 1993. "Rewards, Experience and Decision Costs in First Price Auctions," Economic Inquiry, Western Economic Association International, vol. 31(2), pages 237-45, April.
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