Weather Roulette

13th November 2019

Lead institution:
The London School of Economics and Political Science

Author:
Professor Leonard Smith, Director of the Centre for the Analysis of Time Series

Summary:
Weather Roulette  is a framework for evaluating the performance of forecasts by translating the probabilities into effective daily interest rates (a measure used in finance to show the actual return from a particular interest rate). The exercise starts with an initial investment, such as one euro, and after every round of betting on the weather outcome, the total value (profit and initial value) is reinvested.

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