TY - JOUR
T1 - Effects of different ways of incentivizing price forecasts on market dynamics and individual decisions in asset market experiments
AU - Hanaki, Nobuyuki
AU - Akiyama, Eizo
AU - Ishikawa, Ryuichiro
N1 - Funding Information:
We thank anonymous referees and an associate editor for constructive comments. Makoto Soga provided invaluable help in organizing the experiments. This project is partly financed by L'Institute Universitaire de France, the ANR ORA-Plus project “BEAM” (ANR-15-ORAR-0004), and JSPS KAKENHI Grant Numbers 26285043, 26350415, 26245026, and 26590026. It also benefited from financial support from the French government managed by l'Agence Nationale de la Recherche under Investissements d'Avenir UCAJEDI (ANR-15-IDEX-01). In particular, we thank the UCAinACTION project. We also thank Edanz Group (www.edanzediting.com) for editing a draft of this manuscript. The experiments reported in this paper have been approved by the Institutional Review Board of the Faculty of Engineering, Information and Systems, University of Tsukuba (No. 2012R25).
Funding Information:
We thank anonymous referees and an associate editor for constructive comments. Makoto Soga provided invaluable help in organizing the experiments. This project is partly financed by L’Institute Universitaire de France, the ANR ORA-Plus project “BEAM” ( ANR-15-ORAR-0004 ), and JSPS KAKENHI Grant Numbers 26285043 , 26350415 , 26245026 , and 26590026 . It also benefited from financial support from the French government managed by l’Agence Nationale de la Recherche under Investissements d’Avenir UCA JEDI (ANR-15-IDEX-01). In particular, we thank the UCAinACTION project. We also thank Edanz Group ( www.edanzediting.com ) for editing a draft of this manuscript. The experiments reported in this paper have been approved by the Institutional Review Board of the Faculty of Engineering, Information and Systems, University of Tsukuba (No. 2012R25).
Publisher Copyright:
© 2018 Elsevier B.V.
PY - 2018/3
Y1 - 2018/3
N2 - In this study, we investigate (a) whether eliciting future price forecasts influences market outcomes and (b) whether differences in the way in which subjects are incentivized to submit “accurate” price forecasts influence market outcomes as well as the forecasts in an experimental asset market. We consider four treatments: one without forecast elicitation and three with forecast elicitation. In two of the treatments with forecast elicitation, subjects are paid based on their performance in both forecasting and trading, while in the other treatment with forecast elicitations, they are paid based on only one of those factors, which is chosen randomly at the end of the experiment. We found no significant effect of forecast elicitation on market outcomes in the latter case. Thus, to avoid influencing the behavior of subjects and market outcomes by eliciting price forecasts, paying subjects based on either forecasting or trading performance chosen randomly at the end of the experiment is better than paying them based on both. In addition, we consider forecast-only experiments: one in which subjects are rewarded based on the number of accurate forecasts and the other in which they are rewarded based on a quadratic scoring rule. We found no significant difference in terms of forecasting performance between the two.
AB - In this study, we investigate (a) whether eliciting future price forecasts influences market outcomes and (b) whether differences in the way in which subjects are incentivized to submit “accurate” price forecasts influence market outcomes as well as the forecasts in an experimental asset market. We consider four treatments: one without forecast elicitation and three with forecast elicitation. In two of the treatments with forecast elicitation, subjects are paid based on their performance in both forecasting and trading, while in the other treatment with forecast elicitations, they are paid based on only one of those factors, which is chosen randomly at the end of the experiment. We found no significant effect of forecast elicitation on market outcomes in the latter case. Thus, to avoid influencing the behavior of subjects and market outcomes by eliciting price forecasts, paying subjects based on either forecasting or trading performance chosen randomly at the end of the experiment is better than paying them based on both. In addition, we consider forecast-only experiments: one in which subjects are rewarded based on the number of accurate forecasts and the other in which they are rewarded based on a quadratic scoring rule. We found no significant difference in terms of forecasting performance between the two.
KW - Experimental asset markets
KW - Price forecast elicitation
UR - http://www.scopus.com/inward/record.url?scp=85044656109&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85044656109&partnerID=8YFLogxK
U2 - 10.1016/j.jedc.2018.01.018
DO - 10.1016/j.jedc.2018.01.018
M3 - Article
AN - SCOPUS:85044656109
SN - 0165-1889
VL - 88
SP - 51
EP - 69
JO - Journal of Economic Dynamics and Control
JF - Journal of Economic Dynamics and Control
ER -