Demand Forecasting Behavior: System Neglect and Change Detection

Mirko Kremer; Brent Moritz; Enno Siemsen

doi:10.1287/mnsc.1110.1382

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Demand Forecasting Behavior: System Neglect and Change Detection

Journal article

Peer reviewed

Demand Forecasting Behavior: System Neglect and Change Detection

Mirko Kremer, Brent Moritz and Enno Siemsen

Management science, Vol.57(10), pp.1827-1843

10/01/2011

DOI: 10.1287/mnsc.1110.1382

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Abstract

We analyze how individuals make forecasts based on time-series data. Using a controlled laboratory experiment, we find that forecasting behavior systematically deviates from normative predictions: Forecasters overreact to forecast errors in relatively stable environments, but underreact to errors in relatively unstable environments. The performance loss that is due to such systematic judgment biases is larger in stable than in unstable environments.

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Details

Title: Subtitle: Demand Forecasting Behavior: System Neglect and Change Detection
Creators: Mirko Kremer - Pennsylvania State University
Brent Moritz - Pennsylvania State University
Enno Siemsen - University of Minnesota
Resource Type: Journal article
Publication Details: Management science, Vol.57(10), pp.1827-1843
DOI: 10.1287/mnsc.1110.1382
ISSN: 0025-1909
eISSN: 1526-5501
Publisher: Informs
Number of pages: 17
Grant note: Smeal College of Business Carlson School of Management
Language: English
Date published: 10/01/2011
Academic Unit: Business Analytics
Record Identifier: 9985219304802771

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