Combined Forecasting: Effect of Amplitude of Data variation and Context Framing on the Anchoring Point in Forecasting

Authors

  • Yen-Tsang Chen NEOMA Business School
  • Ashwin Irudayam Yettukuri Leo Neoma Business School

Keywords:

Judgmental forecasting, heuristic, anchoring point, controlled experiment, gain/loss framing

Abstract

There is no doubt about the importance of quantitative forecasting models in management. However, in uncertain scenarios, established mathematical models should be adjusted, since variables and parameters might have changed compared to the original models. By considering this fact, human judgments are required in forecasting. However, it is known that decision-makers are bounded rationally, hence, they employ heuristics to simplify certain decision-making. Our study aims to investigate how the amplitude of variation of historical demand and the gain/loss framing of business context could drive decision-makers away from the forecasting anchoring point. Methodologically, we employed controlled experiment and analyzed the data using ordinary least square regression. Our results demonstrated that amplitude of variation could negatively influence the deviation around the anchoring point and no statistical effect of the business context framing was noted. Managerially, we contributed by reminding the managers about the possible bias in their judgment and methods to avoid it. The detailed discussion could be found in the manuscript.

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Published

2021-10-11

How to Cite

Chen, Y.-T., & Irudayam Yettukuri Leo, A. (2021). Combined Forecasting: Effect of Amplitude of Data variation and Context Framing on the Anchoring Point in Forecasting. Práticas Em Contabilidade E Gestão, 9(3), 1–22. Retrieved from http://editorarevistas.mackenzie.br/index.php/pcg/article/view/14625

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