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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.
Year of publication:
2007-10-02
Authors: Franses, Ph.H.B.F.
Institutions: Erasmus University Rotterdam, Econometric Institute
Subject: law of small numbers | expert adjustment | model-based forecast
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Extent:
application/pdf
Series:
Econometric Institute Report. - ISSN 1566-7294.
Type of publication: Book / Working Paper
Notes:
The text is part of a series RePEc:dgr:eureir Number EI 2007-42
Source:
Persistent link: https://www.econbiz.de/10005504985
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