Judgemental adjustment of initial forecasts: Its effectiveness and biases

Abstract

Managers are often required to integrate their own forecasts with statistical forecasts. The studies reported in this paper examine the efficacy of allowing people to adjust their own forecasts in the light of statistical forecasts that are provided to them. Three experimental studies varied the reliability of the statistical forecasts and examined the performance of people over time. Issues of the form of the feedback and the use of decision support were also examined. The results unequivocally suggest that the effectiveness of judgemental adjustment depended on the statistical model's reliability and seasonally of time series. However, people had considerable difficulty placing less weight on their own forecasts (compared to the statistical forecasts) and this behaviour became more pronounced over time. Even provision of decision support did not improve performance at the task.