Decision-Directed Forecasting for Major Disruptions: The Impact of 9/11 on Las Vegas Gaming Revenues

When a major disruption such as 9/11 occurs, managers don’t know what the future holds and may have to put off important decisions while awaiting future data. In many cases, post-disruption conditions are unprecedented, and neither management’s prior experience nor traditional extrapolation methods are of much value. Steve and Don propose a new procedure, decision-directed forecasting, that provides a rational basis for evaluating decision options as new data become available. The decision maker using it is less prone to making a premature decision and better able to recognize when the post-disruption data support a decision option. They use the dramatic fall in Las Vegas gaming revenue after 9/11 to illustrate their approach. Copyright International Institute of Forecasters, 2007