{"id":70860,"date":"2025-10-27T13:52:36","date_gmt":"2025-10-27T11:52:36","guid":{"rendered":"https:\/\/www.uol.ac.cy\/?p=70860"},"modified":"2025-10-27T13:52:46","modified_gmt":"2025-10-27T11:52:46","slug":"the-decrease-in-confidence-with-forecast-extremity-international-journal-of-forecasting","status":"publish","type":"post","link":"https:\/\/www.uol.ac.cy\/en\/the-decrease-in-confidence-with-forecast-extremity-international-journal-of-forecasting\/","title":{"rendered":"The decrease in confidence with forecast extremity.\u00a0International Journal of Forecasting.\u00a0"},"content":{"rendered":"\n<h4 class=\"wp-block-heading\">Abstract<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">A large panel of chief financial officers\u2019 forecasts of the S&amp;P 500 annual returns and four experiments suggest that forecast confidence decreases as the forecasts diverge from zero, in the positive or negative direction. This decreased confidence is reflected in longer forecast intervals, larger perceived volatility estimates, and weaker belief in the accuracy of the predictions.&nbsp;<a href=\"https:\/\/www.sciencedirect.com\/science\/article\/abs\/pii\/S0169207024000712?via%3Dihub#b24\">De Bondt<\/a>\u2019s (<a href=\"https:\/\/www.sciencedirect.com\/science\/article\/abs\/pii\/S0169207024000712?via%3Dihub#b24\">1993<\/a>) forecast hedging intensifies with the extremity of the forecasts, but the decrease in confidence is sustained when the intervals are symmetrized. Imposing cumulative prospect theory preferences on the CFOs, permutation tests show that the decreased confidence delays the response to optimistic expectations and alleviates miscalibration, although the optimistic CFOs still discount the VIX by more than 50%. The paper thus reveals a self-corrective mechanism that partially, but far from fully, offsets the overconfidence hazards.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">Sonsino, D., &amp; Roth, Y. (2025).<\/p>\n<\/blockquote>\n\n\n\n<div class=\"wp-block-uagb-buttons uagb-buttons__outer-wrap uagb-btn__default-btn uagb-btn-tablet__default-btn uagb-btn-mobile__default-btn uagb-block-c8551a6b\"><div class=\"uagb-buttons__wrap uagb-buttons-layout-wrap \">\n<div class=\"wp-block-uagb-buttons-child uagb-buttons__outer-wrap uagb-block-3504d19b wp-block-button\"><div class=\"uagb-button__wrapper\"><a class=\"uagb-buttons-repeater wp-block-button__link\" aria-label=\"\" href=\"https:\/\/www.sciencedirect.com\/science\/article\/abs\/pii\/S0169207024000712?via%3Dihub\" rel=\"nofollow noopener\" target=\"_blank\" role=\"button\"><div class=\"uagb-button__link\">learn more<\/div><span class=\"uagb-button__icon uagb-button__icon-position-after\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\" aria-hidden=\"true\" focussable=\"false\"><path d=\"M438.6 278.6l-160 160C272.4 444.9 264.2 448 256 448s-16.38-3.125-22.62-9.375c-12.5-12.5-12.5-32.75 0-45.25L338.8 288H32C14.33 288 .0016 273.7 .0016 256S14.33 224 32 224h306.8l-105.4-105.4c-12.5-12.5-12.5-32.75 0-45.25s32.75-12.5 45.25 0l160 160C451.1 245.9 451.1 266.1 438.6 278.6z\"><\/path><\/svg><\/span><\/a><\/div><\/div>\n<\/div><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Abstract A large panel of chief financial officers\u2019 forecasts of the S&amp;P 500 annual returns and four experiments suggest that forecast confidence decreases as the forecasts diverge from zero, in the positive or negative direction. This decreased confidence is reflected in longer forecast intervals, larger perceived volatility estimates, and weaker belief in the accuracy of [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":69156,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","_seopress_analysis_target_kw":"","_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[123],"tags":[],"publication_author":[194],"publication_year":[189],"class_list":["post-70860","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-publications","publication_author-doron-sonsino","publication_year-189"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino.jpg","uagb_featured_image_src":{"full":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino.jpg",1200,628,false],"thumbnail":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino-150x150.jpg",150,150,true],"medium":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino-300x157.jpg",300,157,true],"medium_large":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino-768x402.jpg",768,402,true],"large":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino-1024x536.jpg",1024,536,true],"1536x1536":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino.jpg",1200,628,false],"2048x2048":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino.jpg",1200,628,false],"trp-custom-language-flag":["https:\/\/www.uol.ac.cy\/wp-content\/uploads\/2025\/10\/3a_dr_doron-_sonsino-18x9.jpg",18,9,true]},"uagb_author_info":{"display_name":"p.efstathiou@uol.ac.cy","author_link":"https:\/\/www.uol.ac.cy\/en\/author\/p-efstathiouuol-ac-cy\/"},"uagb_comment_info":0,"uagb_excerpt":"Abstract A large panel of chief financial officers\u2019 forecasts of the S&amp;P 500 annual returns and four experiments suggest that forecast confidence decreases as the forecasts diverge from zero, in the positive or negative direction. This decreased confidence is reflected in longer forecast intervals, larger perceived volatility estimates, and weaker belief in the accuracy of&hellip;","jetpack_shortlink":"https:\/\/wp.me\/peAODB-iqU","publishpress_future_action":{"enabled":false,"date":"2026-05-28 05:22:23","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/posts\/70860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/comments?post=70860"}],"version-history":[{"count":0,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/posts\/70860\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/media\/69156"}],"wp:attachment":[{"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/media?parent=70860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/categories?post=70860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/tags?post=70860"},{"taxonomy":"publication_author","embeddable":true,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/publication_author?post=70860"},{"taxonomy":"publication_year","embeddable":true,"href":"https:\/\/www.uol.ac.cy\/en\/wp-json\/wp\/v2\/publication_year?post=70860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}