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Are forecasters reluctant to revise their predictions? Some German evidence
Author(s) -
Kirchgässner Gebhard,
Müller Ulrich K.
Publication year - 2006
Publication title -
journal of forecasting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.543
H-Index - 59
eISSN - 1099-131X
pISSN - 0277-6693
DOI - 10.1002/for.995
Subject(s) - german , mistake , consensus forecast , economics , econometrics , association (psychology) , positive economics , actuarial science , financial economics , psychology , history , political science , law , archaeology , psychotherapist
People are reluctant to admit mistakes. This could also be true of economic forecasters. If revisions of past forecasts are costly, then it will become optimal for forecasters to only partially adjust a past forecast in the light of new information. The unwillingness to admit to the mistake in the old forecast generates a bias of the new forecast in the direction of the old forecast. We test this hypothesis for the joint predictions of the Association of German Economic Research Institutes over the last 35 years. We find some evidence for such a bias and compute the implied unwillingness to revise forecasts. Copyright © 2006 John Wiley & Sons, Ltd.