Concentration and Unpredictability of Forecasts in Artificial Investment Games: An Online Experiment on WeChat

Prof. Zhao is Associate Professor of Economics, Chinese University of Hong Kong (Shenzhen), he worked as Assistant Professor of Economics at Hong Kong University of Science and Technology. Prof. Zhao gets his Ph.D. from University of Mannheim. His research interests include Contract Theory, Applied Microeconomics, Psychology and Economics, Experimental Economics. He has published his research articles in top ranking international journals such as Review of Economics Studies.

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This paper is the first to explore the WeChat platform, one of the largest social media, to conduct an online experiment of artificial investment games. We investigate how people's forecasts about financial market are shaped by the environment, in which people interact before making investment decisions. Our treatments manipulate whether subjects can observe others' forecasts and whether subjects engage in public or private investment decisions. We find that subjects' forecasts significantly converge when shared, though in different directions across groups. Thus, information sharing does not necessarily lead to a better decision. We also observe a strong positive correlation between forecasts and investments, suggesting that an individual's reported forecast is associated with his belief.