AN ALTERNATIVE PROXY FOR EXPECTATIONS - SOME EXPERIMENTAL-EVIDENCE

Traditionally, econometric forecasts or subjective estimates are employed as proxies for the expectations process. This paper suggests an alternative proxy: modeled subjective estimates, which may combine the twin advantages of (1) the stability and reliability of a model, and (2) being close to the psychological process of decision making. The statistical condition when modeled subjective estimates outperform subjective estimates is tested in an experimental setting. The results reveal that in a majority of cases, modeled subjective estimates marginally outperform subjective estimates. © 1991.