Can Business Students Forecast Their Own Grade?

Abstract

This study examines grade expectations of two groups of business students for their final course mark. We separate students that are on average “better” forecasters on the basis of them not making significant forecast errors during the semester from those students that are poor forecasters of their final grade. We find that the better forecasters are students that have a higher final grade on average than the poor forecasters. The sample evidence indicates that students’ are overconfident, as indicated by their initial grade expectations, irrespective of ability to forecast. But these expectations change during the semester in the downwards direction as students accumulate information on their performance. As expected the poor forecasting students have much more sluggish expectations.