Experts adjusting model-based forecasts and the law of small numbers

This paper conjectures that the behaviour of experts who adjust statistical-model-based forecasts obeys the Law of Small Numbers [LSN]. To put this hypothesis to an empirical test, I propose a simple but effective methodology. It is applied to a database containing information on many experts and their adjustments to forecasts of monthly sales of a variety of products. I find strong evidence in support of the LSN. Implications of this finding are discussed.

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Year of publication:	2007-10-02
Authors:	Franses, Philip Hans
Institutions:	Faculteit der Economische Wetenschappen, Erasmus Universiteit Rotterdam
Subject:	expert adjustment \| law of small numbers \| model-based forecast

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Extent:	application/pdf
Series:	Econometric Institute Research Papers. - ISSN 1566-7294.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series RePEc:ems:eureir Number EI 2007-42
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010837797