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Individual forecasting behavior

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  • Johannes Leitner

Abstract

Participants of a laboratory experiment judgmentally forecast a time series. In order to support their forecasts they are given a highly correlated indicator with a constant lead period of one. The subjects are not given any other information than the time series realizations and have to base their forecasts on pure eyeballing/chart-reading. Standard economic models do not appropriately account for the features of individual forecasts: These are typically affected by intra- and inter-individual instability of behavior. We extend the scheme theory by Otwin Becker for the explanation of individual forecasts by simple schemes based on visually perceived characteristics of the time series. We find that the forecasts of most subjects can be explained very accurately by only a few schemes. Copyright Springer-Verlag 2009

Suggested Citation

  • Johannes Leitner, 2009. "Individual forecasting behavior," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 17(1), pages 65-80, March.
    • Handle: RePEc:spr:cejnor:v:17:y:2009:i:1:p:65-80
    DOI: 10.1007/s10100-008-0075-x
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    References listed on IDEAS

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    1. Cavaglia, Stefano & Verschoor, Willem F. C. & Wolff, Christian C. P., 1993. "Further evidence on exchange rate expectations," Journal of International Money and Finance, Elsevier, vol. 12(1), pages 78-98, February.
    2. Becker, Otwin & Leitner, Johannes & Leopold-Wildburger, Ulrike, 2007. "Heuristic modeling of expectation formation in a complex experimental information environment," European Journal of Operational Research, Elsevier, vol. 176(2), pages 975-985, January.
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