No. 1532 - Overconfident forecasters and the impact of inflation information: evidence from a randomized survey experiment
The paper examines how firms form their expectations about inflation and investigates whether providing companies with information on the latest available data improves their ability to forecast its evolution. It uses data on the expectations of Italian firms, a random subset of which was provided with updated information on inflation at the time of the survey.
Firms that received updated information on inflation produced more accurate forecasts and revised them in a way more consistent with economic developments compared to those that did not receive such data. The model that best explains these effects is overconfidence: firms tend to place excessive trust in their own beliefs, but this bias diminishes when they are provided with reliable public information.
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