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| Main Authors: | , , |
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| Format: | Preprint |
| Published: |
2025
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2512.23847 |
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| _version_ | 1866914224992681984 |
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| author | Gao, Zhenyu Jiang, Wenxi Yan, Yutong |
| author_facet | Gao, Zhenyu Jiang, Wenxi Yan, Yutong |
| contents | We develop a statistical test to detect lookahead bias in economic forecasts generated by large language models (LLMs). Using state-of-the-art pre-training data detection techniques, we estimate the likelihood that a given prompt appeared in an LLM's training corpus, a statistic we term Lookahead Propensity (LAP). We formally show that a positive correlation between LAP and forecast accuracy indicates the presence and magnitude of lookahead bias, and apply the test to two forecasting tasks: news headlines predicting stock returns and earnings call transcripts predicting capital expenditures. Our test provides a cost-efficient, diagnostic tool for assessing the validity and reliability of LLM-generated forecasts. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2512_23847 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | A Test of Lookahead Bias in LLM Forecasts Gao, Zhenyu Jiang, Wenxi Yan, Yutong General Finance Machine Learning Trading and Market Microstructure We develop a statistical test to detect lookahead bias in economic forecasts generated by large language models (LLMs). Using state-of-the-art pre-training data detection techniques, we estimate the likelihood that a given prompt appeared in an LLM's training corpus, a statistic we term Lookahead Propensity (LAP). We formally show that a positive correlation between LAP and forecast accuracy indicates the presence and magnitude of lookahead bias, and apply the test to two forecasting tasks: news headlines predicting stock returns and earnings call transcripts predicting capital expenditures. Our test provides a cost-efficient, diagnostic tool for assessing the validity and reliability of LLM-generated forecasts. |
| title | A Test of Lookahead Bias in LLM Forecasts |
| topic | General Finance Machine Learning Trading and Market Microstructure |
| url | https://arxiv.org/abs/2512.23847 |