Individual vs Group : Advice Taking in Judgmental Forecasting Adjustments

Using a controlled laboratory experiment, we test the effect of individual versus group when making judgmental forecasting adjustments. When individuals make decisions, especially that are exacting task like forecasting, they often feel anxious. Yet, when groups make decisions, they feel less anxious due to the spread of responsibility. We test the influence of anxiety on advice taking and the ability to discern the quality of advice. Across seven different types of time series (i.e., constant mean, mean change, random walk, random walk with drift, ARIMA(0,1,1), ARIMA(1,1,0)), the influence of anxiety on advice taking is described. Anxious individuals are found to be more reliable on advice than those in a neutral emotional state, but the effect of anxiety on one’s ability to discern depends on the nature of time series. For non-stationary time series, individuals in a neutral emotional state are found to be more receptive to good advice than bad advice while anxious individuals fail to discriminate between good and bad advice. However, this behavior disappears when the time series is stationary (i.e. constant mean)