What Goes Up Must Come Down? Experimental Evidence on Intuitive Forecasting.

  title={What Goes Up Must Come Down? Experimental Evidence on Intuitive Forecasting.},
  author={John Beshears and James J. Choi and Andreas Fuster and David Laibson and Brigitte C. Madrian},
  journal={The American economic review},
  volume={103 3},
Do laboratory subjects correctly perceive the dynamics of a mean-reverting time series? In our experiment, subjects receive historical data and make forecasts at different horizons. The time series process that we use features short-run momentum and long-run partial mean reversion. Half of the subjects see a version of this process in which the momentum and partial mean reversion unfold over 10 periods ('fast'), while the other subjects see a version with dynamics that unfold over 50 periods… CONTINUE READING
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