Effects of Feedback on Probabilistic Forecasts of Stock Prices

International Journal of Forecasting, Vol. 11, pp. 307-319, 11, 1995

Posted: 23 Nov 2008

See all articles by Yaz Gulnur Muradoglu

Yaz Gulnur Muradoglu

Queen Mary University of London; City University London - Sir John Cass Business School

Dilek Onkal

Bilkent University

Date Written: 1995

Abstract

This paper reports the results of an experiment in stock-price forecasting that investigated the effects of feedback on various dimensions of probability forecasting accuracy. Three types of feedback were used: (1) simple outcome feedback, (2) outcome feedback presented in the task format, and (3) performance feedback in the form of an overall accuracy score in addition to detailed calibration information. While calibration improved for all the feedback groups, forecasters' skill was found to improve only for the task-formated outcome feedback and performance feedback groups (but not for the simple outcome feedback group). Finally, the forecasters in the performance feedback group also improved their mean slope and mean probability scores, an effect not observed in the other feedback groups. It is suggested that, in a dynamic environment like the stock market, probability forecasting offers distinct advantages by providing an important channel of communication between the forecasters and the users of financial information.

Keywords: Probability forecasting, Judgmental forecasting, Stock-price forecasting, Outcome feedback, Performance feedback, Calibration

Suggested Citation

Muradoglu, Yaz Gulnur and Onkal, Dilek, Effects of Feedback on Probabilistic Forecasts of Stock Prices (1995). International Journal of Forecasting, Vol. 11, pp. 307-319, 11, 1995. Available at SSRN: https://ssrn.com/abstract=1298542

Yaz Gulnur Muradoglu

Queen Mary University of London ( email )

Francis Bancroft Building
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London, E1 4NS
United Kingdom

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 20 7040 0124 (Phone)
+44 20 7040 8853 (Fax)

Dilek Onkal (Contact Author)

Bilkent University ( email )

Bilkent University
Faculty of Business Administration
Bilkent, Ankara 06800
Turkey
+90.312.290.1596 (Phone)

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