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Individual versus group spot price forecasting in the international petroleum market: A case study
Author(s) -
Brocato Joe,
Kumar Akhil,
Smith Kenneth L.
Publication year - 1989
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090100103
Subject(s) - comparability , econometrics , order (exchange) , economics , group (periodic table) , statistical hypothesis testing , statistical analysis , rational expectations , statistics , mathematics , finance , chemistry , organic chemistry , combinatorics
This paper utilizes the conventional statistical tests associated with the rational expectations hypothesis so as to compare the relative accuracy of individual versus group forecasting within the organization. In order to maintain comparability between forecasting regimens the study employs like information sets for the two prediction methods. Using the rational expectations tests as criteria, the statistical results show group forecasts inferior to individually produced predictions These findings imply that group‐produced forecasting accuracy may be hampered by the psychological interaction associated with consensus behavior. Conversely, we find forecasting accuracy improves when predictions are elicited from individuals in an isolated laboratory‐like setting.