Evaluating Strategic Forecasters
Rahul Deb, Mallesh M. Pai, Maher Said
American Economic Review · 2018 · Volume 108 · Issue 10
Abstract
Motivated by the question of how one should evaluate professional election forecasters, we study a novel dynamic mechanism design problem without transfers. A principal who wishes to hire only high-quality forecasters is faced with an agent of unknown quality. The agent privately observes signals about a publicly observable future event, and may strategically misrepresent information to inflate the principal's perception of his quality. We show that the optimal deterministic mechanism is simple and easy to implement in practice: it evaluates a single, optimally timed prediction. We study the generality of this result and its robustness to randomization and noncommitment.
Keywords
Forecasting Models, Simulation Methods, Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior, Asymmetric and Private Information, Mechanism Design
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