Overconfidence in Supreme Court predictions

Is such a large shift in sentiment justified? In my view, probably not. This may be another case of traders being overconfident about the value of their information, a property which has also been observed in the stock market.

To be clear, the evidence is that oral arguments do have some predictive power in forecasting Supreme Court decisions, according to a variety of empirical analyses from academic and legal scholars. It’s just a question of how much power they have, and how unambiguous the evidence about oral arguments is in any particular case. …

These indicators are probably of little value. Instead, studies have found that predictions made by “expert” commentators on the Supreme Court do barely any better than a coin flip and are beaten by the statistical methods (a finding that follows the poor overall track record of experts in making predictions under many other circumstances). These experts are irrationally confident about their ability to read the tea leaves, and their predictions suffer for it.