1. The Oracle or the Crowd? Experts versus the Stock Market in Forecasting Ceasefire Success in the Levant.
- Author
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Bosler, Naomi and Schneider, Gerald
- Subjects
- *
ARMISTICES , *STOCK exchanges , *PEACE , *TOURISM - Abstract
The forecasting literature disagrees over the accuracy of predictions made by individual experts ("oracles) or a collective of individuals who are not as well informed ("crowd"). We discuss this controversy in light of competing interpretations of the Condorcet Jury Theorem and evaluate these two competing views in a quantitative analysis of the ex ante success of ceasefire agreements in various conflicts in the Levant. Our analysis compares the forecasts appearing in press commentaries (Jerusalem Post, New York Times) with the expectations that the Tel Aviv Stock Exchange has about the fate of these cooperative efforts. To evaluate the predictions of these very dissimilar sources, we analyse the effectiveness of 21 ceasefires through the number of violent events following the official start of the truce. The analysis shows that especially tourism stocks can be used to predict the success of ceasefires. The forecasts derived from the New York Times are more accurate than a chance prediction, whereas the editorials of the Jerusalem Post assess the prospects of the examined truces less precisely. The overall evidence suggests in line with a traditional interpretation of the Condorcet Jury Theorem and a growing experimental literature that a group of non-experts can provide better forecasts than individual experts. [ABSTRACT FROM AUTHOR]
- Published
- 2011