[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-152759-105":59,"doc-detail-152759-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","a-new-hedging-hypothesis-regarding-prediction-interval-formation-in-stock-price-forecasting","A new hedging hypothesis regarding prediction interval formation in stock price forecasting","","A new hedging hypothesis is proposed and tested to explain how prediction intervals are formed in stock price forecasting under uncertainty. Forecasters are assumed to hedge their forecasts by adjusting the bounds of the prediction interval toward their belief about the average forecasts of others. The study predicts a positive link between the belief wedge—defined as the difference between FAPFO and the subject’s point forecast—and the asymmetry of the prediction interval. Empirical evidence comes from two in-class surveys, a controlled experiment, and a large professional-analyst survey of future stock price forecasts.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/a-new-hedging-hypothesis-regarding-prediction-interval-formation-in-stock-price-forecasting/152759/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/a-new-hedging-hypothesis-regarding-prediction-interval-formation-in-stock-price-forecasting/152759.png","ImageObject",300,407,{"name":92,"@type":93},"Ivy","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-25","2026-08-27",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",14,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What hedging hypothesis is proposed in the study?","Question",{"text":113,"@type":114},"Forecasters are hypothesized to hedge their forecasts by adjusting the bounds of the prediction interval so that it reflects their belief about the average forecasts of others (FAPFO).","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How is the belief wedge defined, and what does it predict?",{"text":118,"@type":114},"The belief wedge is the difference between the subject’s forecast of the average forecast of others and the subject’s own point forecast. The study predicts a positive relationship between the belief wedge and the asymmetry of the prediction interval.",{"name":120,"@type":111,"acceptedAnswer":121},"How was evidence for the hypothesis collected?",{"text":122,"@type":114},"The hypothesis was tested using two in-class surveys, an experiment, and a large survey of professional analysts’ forecasts of future stock prices.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},152759,1787866935,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":140,"language":141,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":142,"faqs":143,"seo_title":144,"seo_description":67,"update_tm":130,"read_time":145,"preview_page_count":4},549758252649,"https://ap-avatar.wpscdn.com/avatar/8000253669c5317157?_k=1778319167496531819","Received: 18 October 2019 Revised: 3 September 2021 Accepted: 19 September 2021  \nDOI: 10.1002/for.2830  \nRESE ARCH ARTICL E  \nA new hedging hypothesis regarding prediction interval formation in stock price forecasting  \nDan Zhu1 | Qingwei Wang2  | John Goddard3  \n1Wu jinglian School of Economics, Changzhou University, Changzhou, China  \n2Cardiff Business School, Cardiff University, Cardiff, UK 3Bangor Business School, Bangor University, Bangor, UK  \nCorrespondence  \nQingwei Wang, Cardiff Business School, Cardiff University, Aberconway Building, Colum Drive, Cardiff CF10 3EU, UK. [Email:](Email: wangQ30@cardiff.ac.uk)[ wangQ30@cardiff.ac.uk](Email: wangQ30@cardiff.ac.uk)  \nAbstract  \nWe propose and test a simple hedging hypothesis for prediction interval formation in stock price forecasting. In the presence of uncertainty, forecasters hedge their forecasts by adjusting the bounds of the prediction interval in a way that reflects their forecast of the average forecast of others. This hypothesis suggests a positive relationship between the belief wedge, defined as the difference between the subject's forecast of the average forecast of others and the subject's own point forecast, and the asymmetry of the prediction interval. Empirical support for the hedging hypothesis is drawn from two in-class surveys, an experiment, and a large survey of professional analysts' forecasts of future stock prices.  \nKEYWOR DS  \nasymmetry, decision making under uncertainty, forecasts, forecast of average forecasts of others, prediction intervals  \n1 | INTRODUCTION  \nA rapidly growing literature, surveyed by Lawrence et al. (2006), acknowledges the importance of incorporating judgments to improve the accuracy of forecasts or predictions. Forecast accuracy, however, is not the only consideration when making forecasting judgments (O'Connor et al. 2001) . Forecasters are often required to report a prediction interval that reflects the uncertainty associated with a point forecast. Prior literature typically assumed that the decision maker's judgmental prediction interval (JPI) is symmetric around the point forecast (e.g., Taylor and Bunn 1999) . However, several studies have reported evidence of asymmetric JPIs (De Bondt, 1993; Du & Budescu, 2007; O'Connor et al. 2001) . Despite this empirical evidence, why JPIs are often asymmetric remains an open question.  \nThe primary goal of our study is to propose and test anew hypothesis that helps explain the asymmetry of the JPI. Keynes (1936), among others, claimed that market participants are likely to take others' forecasts into  \naccount when making financial decisions. We consider the viewpoint of a forecaster who faces the task of predicting future stock prices. Without knowing the opinions of others, the forecaster produces his own point forecast and his forecast of the average point forecast of others (hereafter “FAPFO”) . We hypothesize that the JPI constructed by the forecaster around his point forecast may reflect a tendency for the forecaster to hedge his own forecast with his FAPFO.  \nAccordingly, we hypothesize that if the forecaster's point forecast diverges from his FAPFO,1,2 he hedges his own belief by creating a JPI oriented in the direction of  \n1Forecasters' own point forecast may differ from their FAPFO when the forecasters believe that (1) they have more information than others;  \n(2) others adopt forecasting models that differ from their own; (3) others have different prior beliefs.  \n2The psychology literature reports a tendency for subjects to overestimate the extent to which other people agree with them, known as the “false-consensus bias”(Marks & Miller, 1987; Ross et al. 1977) . Although false-consensus bias may tend to reduce the belief wedge, we argue that it does not eliminate it.  \nJournal of Forecasting. 2022;41:697–717.  \n[wileyonlinelibrary.com/journal/for](wileyonlinelibrary.com/journal/for)  \n© 2021 John Wiley & Sons, Ltd.  \n697  \n698  \nZHU ET AL.  \nFIGURE 1 Stylized repres","cbCaiuwjsdZVsJht","https://ap.wps.com/l/cbCaiuwjsdZVsJht","pdf",4671764,21,"English","# Abstract\n# Introduction\n## Prediction intervals and asymmetric judgmental intervals\n## Belief wedge and hedging via others’ forecasts\n## Principal hypothesis and scenario logic\n# Empirical tests and data sources","[{\"question\":\"What hedging hypothesis is proposed in the study?\",\"answer\":\"Forecasters are hypothesized to hedge their forecasts by adjusting the bounds of the prediction interval so that it reflects their belief about the average forecasts of others (FAPFO).\"},{\"question\":\"How is the belief wedge defined, and what does it predict?\",\"answer\":\"The belief wedge is the difference between the subject’s forecast of the average forecast of others and the subject’s own point forecast. The study predicts a positive relationship between the belief wedge and the asymmetry of the prediction interval.\"},{\"question\":\"How was evidence for the hypothesis collected?\",\"answer\":\"The hypothesis was tested using two in-class surveys, an experiment, and a large survey of professional analysts’ forecasts of future stock prices.\"}]","A new hedging hypothesis regarding prediction interval formation in stock price forecasting | PDF",53]