The effectiveness of simple decision heuristics: forecasting commercial success for early-stage ventures

The effectiveness of simple decision heuristics: forecasting commercial success for early-stage ventures

0.00 Avg rating0 Votes
Article ID: iaor2008597
Country: United States
Volume: 52
Issue: 3
Start Page Number: 395
End Page Number: 409
Publication Date: Mar 2006
Journal: Management Science
Authors: ,
Keywords: decision: studies
Abstract:

We investigate the decision heuristics used by experts to forecast that early-stage ventures are subsequently commercialized. Experts evaluate 37 project characteristics and subjectively combine data on all cues by examining both critical flaws and positive factors to arrive at a forecast. A conjunctive model is used to describe their process, which sums ‘good’ and ‘bad’ cue counts separately. This model achieves a 91.8% forecasting accuracy of the experts' correct forecasts. The model correctly predicts 86.0% of outcomes in out-of-sample, out-of-time tests. Results indicate that reasonably simple decision heuristics can perform well in a natural and very difficult decision-making context.

Reviews

Required fields are marked *. Your email address will not be published.