Biases in judgmental adjustments of statistical forecasts: The role of individual differences

Biases in judgmental adjustments of statistical forecasts: The role of individual differences

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Article ID: iaor20101190
Volume: 26
Issue: 1
Start Page Number: 116
End Page Number: 133
Publication Date: Jan 2010
Journal: International Journal of Forecasting
Authors: ,
Keywords: judgemental forecasting
Abstract:

Judgmental adjustments of statistical forecasts are widely used for improving forecast accuracy. Despite the overall effectiveness of this method, it may allow forecasters to introduce biases in statistical forecasts when they judgmentally adjust them. This paper considers three types of bias: (1) optimism bias, (2) anchoring bias, and (3) overreaction bias. We explore the effects of particular individual differences, specifically personality, motivational orientation, and work locus of control, on forecasting biases. The results indicate that a forecaster's personality and motivational orientation have significant effects on forecasting biases, whereas work locus of control has no effect on forecasting biases. Our analysis further indicates that experience, work locus of control and motivational orientation drive a forecaster's willingness to judgmentally adjust a statistical forecast.

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