Decision making and planning under low levels of predictability
This special section aims to demonstrate the limited predictability and high level of uncertainty in practically all important areas of our lives, and the implications of this. It summarizes the huge body of solid empirical evidence accumulated over the past several decades that proves the disastrous consequences of inaccurate forecasts in areas ranging from the economy and business to floods and medicine. The big problem is, however, that the great majority of people, decision and policy makers alike, still believe not only that accurate forecasting is possible, but also that uncertainty can be reliably assessed. Reality, however, shows otherwise, as this special section proves. This paper discusses forecasting accuracy and uncertainty, and distinguishes three distinct types of predictions: those relying on patterns for forecasting, those utilizing relationships as their basis, and those for which human judgment is the major determinant of the forecast. In addition, the major problems and challenges facing forecasters and the reasons why uncertainty cannot be assessed reliably are discussed using four large data sets. There is also a summary of the eleven papers included in this special section, as well as some concluding remarks emphasizing the need to be rational and realistic about our expectations and avoid the common delusions related to forecasting.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Benoit Mandelbrot, 1963. "The Variation of Certain Speculative Prices," The Journal of Business, University of Chicago Press, vol. 36, pages 394.
- Goldstein, Daniel G. & Gigerenzer, Gerd, 2009. "Fast and frugal forecasting," International Journal of Forecasting, Elsevier, vol. 25(4), pages 760-772, October.
- Wright, George & Goodwin, Paul, 2009. "Decision making and planning under low levels of predictability: Enhancing the scenario method," International Journal of Forecasting, Elsevier, vol. 25(4), pages 813-825, October.
- Orrell, David & McSharry, Patrick, 2009. "System economics: Overcoming the pitfalls of forecasting models via a multidisciplinary approach," International Journal of Forecasting, Elsevier, vol. 25(4), pages 734-743, October.
- Makridakis, Spyros & Hibon, Michele, 2000. "The M3-Competition: results, conclusions and implications," International Journal of Forecasting, Elsevier, vol. 16(4), pages 451-476.
When requesting a correction, please mention this item's handle: RePEc:eee:intfor:v:25:y:2009:i:4:p:716-733. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.