Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22342
Authors: 
Schmidt, Robert
Leitner, Johannes
Year of Publication: 
2004
Series/Report no.: 
Würzburg economic papers 49
Abstract: 
The study at hand deals with the expectations of professional analysts and novices in the context of foreign exchange markets. We analyze the respective forecasting accuracy and our results indicate that there exist substantial differences between professional forecasts and judgmental forecasts of novices. In search of reasonable explanations for the astonishing result, we evaluate the nature of professional and experimental expectations in more detail and find that while professional exchange rate forecasts seem to be biased predictors for the future exchange rates, judgmental forecasts appear to be unbiased. Furthermore, professional forecasters consistently expect a reversal of forgoing exchange rate changes whereas novices expect a continuation of current movements in the short-run and are reversed in the long-run.
Subjects: 
Foreign exchange market
forecasting
behavioral finance
anchoring heuristics
judgment
expertise
expectation formation
JEL: 
C53
F47
C92
G15
D7
D81
D84
G12
E27
F31
Document Type: 
Working Paper

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