Demand forecasting behavior: System neglect and change detection

Mirko Kremer, Brent Moritz, Enno Siemsen

Research output: Contribution to journalArticle

44 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)1827-1843
Number of pages17
JournalManagement Science
Volume57
Issue number10
DOIs
StatePublished - Oct 1 2011

Keywords

  • Behavioral operations
  • Exponential smoothing
  • Forecasting
  • System neglect

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