Do 'big losses' in judgmental adjustments to statistical forecasts affect experts' behaviour

Research output: Contribution to journalArticle

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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.
Original languageEnglish
Pages (from-to)842-852
JournalEuropean Journal of Operational Research
Volume249
Issue number3
Early online date6 Jun 2015
DOIs
Publication statusPublished - 16 Mar 2016

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Forecast
Adjustment
Forecasting
Pharmaceuticals
Sports
Large Data Sets
Drug products
Guidance
Baseline
Sales
Decrease

Keywords

  • forecasting
  • judgment
  • behavioural analytics
  • decision support systems

Cite this

Do 'big losses' in judgmental adjustments to statistical forecasts affect experts' behaviour. / Petropoulos, Fotios; Fildes, Robert; Goodwin, Paul.

In: European Journal of Operational Research, Vol. 249, No. 3, 16.03.2016, p. 842-852.

Research output: Contribution to journalArticle

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