Rational bias in macroeconomic forecasts

Do professional forecasters provide their true unbiased estimates, or do th ey behave strategically? In our model, forecasters have common information, confer actively, and thus know the true pdf of future outcomes. Intensive users of economic forecasts monitor forecasters' performance closely; occas ional users are drawn to the forecaster who fared best in the previous peri od. In the resulting Nash equilibrium, even though economists have identica l expectations, they make a range of projections that mimics the true proba bility distribution of the forecast variable. Those whose wages depend most on publicity produce forecasts that differ most from the consensus. Empiri cal evidence supports the model.