Thursday, April 25, 2013

Predictions - Who to trust?

Harvard Business Review publishes ""Experts" - Who beat the odds are probably just lucky".

"People whose predictions were most in line with conventional wisdom proved the most accurate overall. But those who made contrarian predictions that paid off big once or twice were viewed as the real market sages—even though their forecasts were incorrect more often than not."

Jerker Denrell answers the questions to prove the about point with his research. He is a professor of behavioral science at the Warwick Business School. One of the more interesting questions was:

"What leads people to make wild predictions? Personality? In the lab, that seems to be the case. In the world there are any number of incentives to make bold predictions. TV ratings, for example. Think of sports prognosticators. Being right about the upcoming game is much less important than getting people to tune in to their outrageous predictions. This is why we used Wall Street Journal inflation and interest rate predictions—those forecasters had no incentive to make optimistic predictions."

Read the complete article here.

No comments: