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Effects of eliciting long-run price forecasts on market dynamics in asset market experiments

Author

Listed:
  • Nobuyuki Hanaki

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Eizo Akiyama

    (Faculty of Engineering, Information and Systems [Tsukuba] - Université de Tsukuba = University of Tsukuba)

  • Ryuichiro Ishikawa

    (School of International Liberal Studies, Waseda University)

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," Working Papers halshs-01263661, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01263661
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01263661v2
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    References listed on IDEAS

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    Cited by:

    1. Hanaki, Nobuyuki & Akiyama, Eizo & Ishikawa, Ryuichiro, 2018. "Behavioral uncertainty and the dynamics of traders’ confidence in their price forecasts," Journal of Economic Dynamics and Control, Elsevier, vol. 88(C), pages 121-136.
    2. Annarita Colasante & Simone Alfarano & Eva Camacho-Cuena & Mauro Gallegati, 2020. "Long-run expectations in a learning-to-forecast experiment: a simulation approach," Journal of Evolutionary Economics, Springer, vol. 30(1), pages 75-116, January.

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    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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