Individual forecasting behavior |
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Authors: | Johannes Leitner |
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Institution: | 1. Department of Statistics and Operations Research, Karl Franzens University, Universit?tsstrasse 15/E3, 8010, Graz, Austria
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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. |
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Keywords: | Expectation formation Heuristics Decision-making Experimental economics |
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