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Order effects in judgmental forecasting

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  • Theocharis, Zoe
  • Harvey, Nigel

Abstract

In two experiments, forecasters produced a sequence of five forecasts from different types of time series, either from the nearest horizon to the most distant one (1, 2, 3, 4, 5) or in one of two other orders, both of which required the forecast for the most distant horizon to be made first (‘end-anchoring’). These latter two orders differed in terms of the direction of the remaining forecasts: either a horizon-increasing order (1, 2, 3, 4) or a horizon-decreasing one (4, 3, 2, 1). End-anchoring improved the forecast accuracy, especially for more distant horizons, and resulted in the trajectory of the forecast sequence being closer to the optimal one. The direction of forecasting after end-anchoring affected the forecast quality only when the optimal trajectory of the forecast sequence displayed a strong nonlinearity. End-anchoring provides a simple means of enhancing judgmental forecasts when predictions for a number of horizons are being produced from each series.

Suggested Citation

  • Theocharis, Zoe & Harvey, Nigel, 2016. "Order effects in judgmental forecasting," International Journal of Forecasting, Elsevier, vol. 32(1), pages 44-60.
    • Handle: RePEc:eee:intfor:v:32:y:2016:i:1:p:44-60
    DOI: 10.1016/j.ijforecast.2015.01.007
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