Effects of feedback on financial forecasting

Abstract

The objective of this study is to examine the effects o f feedback on financial forecasting. In particular, the effects o f simple outcome feedback and cahbration feedback as a type of perfonuance feedback on the accuracy of probabilistic forecasts of stock pi iccs and market indices in dichotomous format are analyzed. The study is conducted on subjects comprised of undergraduate and graduate students from the Faculty of Business Administration at Bilkent University. The results indicate that feedback, especially calibration feedback, has a considerable effect on the performance o f forecasters. ImpUcations of these findings for financial forecasting are discussed and directions for future research are given.