Open AccessRationality of Insurance Firms' Forecasts : Results of Unbiasedness and Efficiency Tests
Author(s) -
Muzafar Shah Habibullah
Publication year - 2020
Publication title -
malaysian management journal/malaysian management journal
Language(s) - English
Resource type - Journals
eISSN - 2289-6651
pISSN - 0128-6226
DOI - 10.32890/mmj.5.1-2.2001.8590
Subject(s) - rationality , revenue , economics , test (biology) , rational expectations , actuarial science , econometrics , finance , paleontology , political science , law , biology
Many applied studies have tried to test the implications of rational expectations hypothesis on survey data. This study provides evidence on the rationality of economic forecasts made by insurance firms in a developing economy-Malaysia. Our unbiasedness test results suggest that anticipated gross revenue and employment are unbiased predictors of actual gross revenue and employment respectively. Furthermore, our efficiency tests results indicate that insurance firms utilized relevant information efficiently at the time the forecasts were made.