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Judgement or models: The importance of task differences

  • Lawrence, M.
  • O'Connor, M.
Registered author(s):

    Over twenty years research on cognitive biases and limitations has built a strong case for managers not to use their judgement if a suitable formula or model is available. Much of this work was built on research demonstrating that in an environment where the judgemental cues are well established, pre-specified and not auto-correlated and where there is little contextual information, that a model based on expert judgement (a model-of-man) is more accurate than the expert himself. However, much practical decision making takes place in a setting where cues are not well established, where auto-correlation is present, and where there is general contextual information. This study investigated decisions made in such a setting, namely time series forecasting. Forecasts were estimated judgementally for 111 real life time series. These estimates were then used to construct a model-of-man and the forecasts from this model compared in accuracy with the original judgemental forecasts. This study found the model-of-man not to be superior to man when assessed in terms of forecast accuracy thus demonstrating a commonly occurring task setting in which the dominant research result in not true.

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    Article provided by Elsevier in its journal Omega.

    Volume (Year): 24 (1996)
    Issue (Month): 3 (June)
    Pages: 245-254

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    Handle: RePEc:eee:jomega:v:24:y:1996:i:3:p:245-254
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    1. E. H. Bowman, 1963. "Consistency and Optimality in Managerial Decision Making," Management Science, INFORMS, vol. 9(2), pages 310-321, January.
    2. Fildes, Robert A & Fitzgerald, M Desmond, 1983. "The Use of Information in Balance of Payments Forecasting," Economica, London School of Economics and Political Science, vol. 50(199), pages 249-58, August.
    3. Robert Carbone & Spyros Makridakis, 1986. "Forecasting When Pattern Changes Occur Beyond the Historical Data," Management Science, INFORMS, vol. 32(3), pages 257-271, March.
    4. Dawes, Robyn & Fildes, Robert & Lawrence, Michael & Ord, Keith, 1994. "The past and the future of forecasting research," International Journal of Forecasting, Elsevier, vol. 10(1), pages 151-159, June.
    5. Lawrence, Michael J. & Edmundson, Robert H. & O'Connor, Marcus J., 1985. "An examination of the accuracy of judgmental extrapolation of time series," International Journal of Forecasting, Elsevier, vol. 1(1), pages 25-35.
    6. Robert C. Blattberg & Stephen J. Hoch, 1990. "Database Models and Managerial Intuition: 50% Model + 50% Manager," Management Science, INFORMS, vol. 36(8), pages 887-899, August.
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