Contrast effects in judgmental forecasting when assessing the implications of worst- and best-case scenarios

Paul Goodwin, M. Sinan Gönül, Dilek Önkal , Ayse Kocabıyıkoğlu, Itir Göğüş

Research output: Contribution to journalArticle

Abstract

Two experiments investigated whether individuals’ forecasts of the demand for products and a stock market index assuming a best or worst-case scenario depend on whether they have seen a single scenario in isolation or whether they have also seen a second scenario presenting an opposing view of the future. Normatively, scenarios should be regarded as belonging to different plausible future worlds so that the judged implications of one scenario should not be affected when other scenarios are available. However, the results provided evidence of contrast effects in that the presentation of a second ‘opposite’ scenario led to more extreme forecasts consistent with the polarity of the original scenario. In addition, people were more confident about their forecasts based on a given scenario when two opposing scenarios were available. We examine the implications of our findings for the elicitation of point forecasts and judgmental prediction intervals and the biases that are often associated with them.
Original languageEnglish
Pages (from-to)1-14
Number of pages14
JournalJournal of Behavioral Decision Making
Early online date26 Apr 2019
DOIs
Publication statusE-pub ahead of print - 26 Apr 2019

Keywords

  • best and worst case scenarios
  • context effects
  • contrast effects
  • demand forecasting
  • prediction intervals
  • stock market forecasting

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Arts and Humanities (miscellaneous)
  • Applied Psychology
  • Sociology and Political Science
  • Strategy and Management

Cite this

Contrast effects in judgmental forecasting when assessing the implications of worst- and best-case scenarios. / Goodwin, Paul; Gönül, M. Sinan; Önkal , Dilek; Kocabıyıkoğlu, Ayse; Göğüş, Itir.

In: Journal of Behavioral Decision Making, 26.04.2019, p. 1-14.

Research output: Contribution to journalArticle

Goodwin, Paul ; Gönül, M. Sinan ; Önkal , Dilek ; Kocabıyıkoğlu, Ayse ; Göğüş, Itir. / Contrast effects in judgmental forecasting when assessing the implications of worst- and best-case scenarios. In: Journal of Behavioral Decision Making. 2019 ; pp. 1-14.
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