Forecast Dispersion in Finite-Player Forecasting Games
23 Pages
Posted: 15 Oct 2014
Last revised: 15 Feb 2017
University of Nebraska at Lincoln - Department of Economics
Sogang University - Department of Economics
Date Written: February 14, 2017
Abstract
We study forecast dispersion in a finite-player forecasting game modeled as an aggregate game with payoff externality and dispersed information. In the game, each agent cares about being accurate as well as about the distance of his forecast from the average forecast; and with a finite number of agents, the agents can strategically control that average. We show that the finiteness of the number of agents weakens the strategic effect induced by the underlying preference. We find that when each agent prefers to be close to the average forecast, the presence of strategic manipulation of the average forecast contributes to a higher forecast dispersion; when instead each agent wants to be distinctive from the average, the opposite is true.
Keywords: forecast dispersion, finite-player, aggregate games, coordination, incomplete information
JEL Classification: C72, D82, D83, E37
Suggested Citation:
Suggested Citation
Kim, Jin Yeub and Shim, Myungkyu, Forecast Dispersion in Finite-Player Forecasting Games (February 14, 2017). Available at SSRN: https://ssrn.com/abstract=2509502 or http://dx.doi.org/10.2139/ssrn.2509502
