Strategic bias and popularity effect in the prediction of economic surprises

Luiz Félix, Roman Kräussl, Philip Stork*

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


Professional forecasters of economic data are remunerated based on accuracy and positive publicity generated for their firms. This remuneration structure incentivizes them to stick to the median forecast but also to make bold forecasts when they perceive to have superior private information. We find that skewness in the distribution of expectations, potentially created by bold forecasts, predicts economic surprises across a wide range of US economic indicators in-sample and out-of-sample, confirming our hypothesis that forecasters behave strategically and possess private information. This strategic bias found in US economic forecasts is also exhibited in individual forecasters' data as well as in continental Europe, the United Kingdom, and Japan. We show that it has been increasing both through time and in relation to the behavioral anchor bias. Our results suggest that the pervasiveness of the biases depends on the popularity of the economic indicator being released, both in the United States and internationally.

Original languageEnglish
Pages (from-to)1095-1117
Number of pages23
JournalJournal of Forecasting
Issue number6
Early online date11 Jan 2021
Publication statusPublished - Sept 2021

Bibliographical note

Publisher Copyright:
© 2021 The Authors. Journal of Forecasting published by John Wiley & Sons Ltd.

Copyright 2021 Elsevier B.V., All rights reserved.


  • economic surprises
  • forecast error
  • predictability
  • skewness
  • strategic bias

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