The Prospect of Rosy Investment Forecasts: Why professional investment grow forecasts tend to display overconfidence and optimis,Used

The Prospect of Rosy Investment Forecasts: Why professional investment grow forecasts tend to display overconfidence and optimis,Used

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SKU: DADAX3844300449
Brand: LAP Lambert Academic Publishing
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There is substantial evidence that forecasts made by professionals in a variety of fields display a bias that suggests overconfidence or optimism. This paper investigates EU survey data on investment growth forecasts. A review of the existing literature finds a plethora of behavioral reasons for the biases. Consequently, this paper decides to use the Prospect Theory as an explanatory framework. A hypothesis is developed that links the forecasting bias to asymmetric behavior between potential gains and losses as well as riskseeking and riskaverse behavior among forecasters. It is due to this behavior that actual investments do not equal planned investments, resulting in a positive bias.

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