Evaluating Strategic Forecasters
50 Pages Posted: 18 Apr 2017 Last revised: 8 May 2019
Date Written: March 29, 2018
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.
Keywords: Dynamic Mechanism Design, Mechanism Design without Transfers, Forecasting, Learning, Election Predictions
JEL Classification: D82, D83, D86
Suggested Citation: Suggested Citation