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Evaluating Strategic Forecasters

Author

Listed:
  • Rahul Deb
  • Mallesh Pai
  • Maher Said

Abstract

Motivated by the question of how one should evaluate professional election forecasters, we study a novel dynamic mechanism design problem without transfers. A principal who wishes to hire only high quality forecasters is faced with an agent of unknown quality. The agent privately observes signals about a publicly observable future event, and may strategically misrepresent information to inflate the principal's perception of his quality. We show that the optimal deterministic mechanism is simple and easy to implement in practice: it evaluates a single, optimally timed prediction. We study the generality of this result and its robustness to randomization and noncommitment.

Suggested Citation

  • Rahul Deb & Mallesh Pai & Maher Said, 2017. "Evaluating Strategic Forecasters," Working Papers tecipa-578, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-578
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    File URL: https://www.economics.utoronto.ca/public/workingPapers/tecipa-578.pdf
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    References listed on IDEAS

    as
    1. Strausz, Roland, 2003. "Deterministic mechanisms and the revelation principle," Economics Letters, Elsevier, vol. 79(3), pages 333-337, June.
    2. Trueman, Brett, 1994. "Analyst Forecasts and Herding Behavior," Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 97-124.
    3. Daniel Krähmer & Roland Strausz, 2011. "Optimal Procurement Contracts with Pre-Project Planning," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 1015-1041.
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    More about this item

    Keywords

    dynamic mechanism design; mechanism design without transfers; forecasting; learning; election predictions.;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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