How additional information influences decision-making of capital market experts
Experts' forecasts are used as a source of information in all social and economic areas. This process extends from politics to weather to the capital market. In recent decades, two scientific phenomena have been observed within the field of forecasts of capital market experts, which influence the concept of expert forecasts in general: "herding" and "anti-herding". In his current scientific publication, Prof. Dr. Heiko von der Gracht examines how additional information influences the forecasts of capital market experts and which of the two phenomena occurs in this case.
It is a social phenomenon that can be observed at various levels: people align their opinions with those of groups or opinion leaders, although they do not hold the same views. The so-called "herding" can be observed not only in sociology and psychology, but also within the field of expert prognoses. An example of this can be found in the capital market. Here, experts adjust their forecasts to the opinions of the masses, regardless of whether the majority forecast corresponds to the private information available only to the expert. The herding here is done either consciously in order not to stand alone in the case of incorrect forecasts or unconsciously if different experts just react identically to the same information.
In direct contrast to this the phenomenon of "anti-herding" can be observed, in the field of capital market experts as well. Here, experts act as loners. They forecast results almost exclusively on the basis of their private information. These can differ far from the mass opinion. In the case of a correct forecast, however, the loner’s performance will be perceived as better than that of the competition, while their false forecasts are often ignored.
In science, the two phenomena described have been specifically investigated over the past decades. In his current scientific publication in the new Wiley journal "Futures and Foresight Science", Prof. Dr. Heiko von der Gracht (School of International Business and Entrepreneurship at Steinbeis University), together with Prof. Ulrich Hommel, PHD, Dr. Tobias Prokesch (EBS Business School) and Dr. Holger Wohlenberg (Managing Director Deutsche Börse Market Data & Services), researches how additional information influences the forecasts of capital market experts and which of the two described phenomena occurs in this case.
Originalpublikation:
https://onlinelibrary.wiley.com/doi/full/10.1002/ffo2.21 - Effects of supplying additional information: Experimental evidence on the behavior of capital market experts
https://doi.org/10.1002/ffo2.21
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