The effect of foreign competition on forecasting bias

• 成果类型: Article
• 署名作者: Fisman, R
• 署名单位: Columbia University; National Bureau of Economic Research
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• 发表日期: 2006-02
• 页码: 61-68
• 关键词: markets

摘要

This paper studies the effect of foreign competition on the extent of forecasting bias. I focus on two biases often described in the behavioral economics literature: overoptimism and excessive belief in trends. Using data from firm-level surveys in five African countries, I show that firms that do not face foreign competition generate forecasts of sales growth that have greater trend and optimism biases than firms that have foreign competitors. I further provide evidence that these erroneous forecasts have real effects on firms' inventory management.