Do ‘big losses’ in judgmental adjustments to statistical forecasts affect experts’ behaviour?

Petropoulos, Fotios and Fildes, Robert Alan and Goodwin, Paul (2016) Do ‘big losses’ in judgmental adjustments to statistical forecasts affect experts’ behaviour? European Journal of Operational Research, 249 (3). pp. 842-852. ISSN 0377-2217

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Abstract

The behaviour of poker players and sports gamblers has been shown to change after winning or losing a significant amount of money on a single hand. In this paper, we explore whether there are changes in experts’ behaviour when performing judgmental adjustments to statistical forecasts and, in particular, examine the impact of ‘big losses’. We define a big loss as a judgmental adjustment that significantly decreases the forecasting accuracy compared to the baseline statistical forecast. In essence, big losses are directly linked with wrong direction or highly overshooting judgmental overrides. Using relevant behavioural theories, we empirically examine the effect of such big losses on subsequent judgmental adjustments exploiting a large multinational data set containing statistical forecasts of demand for pharmaceutical products, expert adjustments and actual sales. We then discuss the implications of our findings for the effective design of forecasting support systems, focusing on the aspects of guidance and restrictiveness.

Item Type:
Journal Article
Journal or Publication Title:
European Journal of Operational Research
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/1800/1802
Subjects:
ID Code:
77358
Deposited By:
Deposited On:
19 Jan 2016 10:16
Refereed?:
Yes
Published?:
Published
Last Modified:
09 Jul 2020 04:07