IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Effectiveness of Simple Decision Heuristics: Forecasting Commercial Success for Early-Stage Ventures

Listed author(s):
  • Thomas Åstebro


    (Joseph L. Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario M5S 3E6, Canada)

  • Samir Elhedhli


    (Department of Management Sciences, University of Waterloo, Waterloo, Ontario N2L 3G1, Canada)

We investigate the decision heuristics used by experts to forecast that early-stage ventures are subsequently commercialized. Experts evaluate 37 project characteristics and subjectively combine data on all cues by examining both critical flaws and positive factors to arrive at a forecast. A conjunctive model is used to describe their process, which sums "good" and "bad" cue counts separately. This model achieves a 91.8% forecasting accuracy of the experts' correct forecasts. The model correctly predicts 86.0% of outcomes in out-of-sample, out-of-time tests. Results indicate that reasonably simple decision heuristics can perform well in a natural and very difficult decision-making context.

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.

File URL:
Download Restriction: no

Article provided by INFORMS in its journal Management Science.

Volume (Year): 52 (2006)
Issue (Month): 3 (March)
Pages: 395-409

in new window

Handle: RePEc:inm:ormnsc:v:52:y:2006:i:3:p:395-409
Contact details of provider: Postal:
7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA

Phone: +1-443-757-3500
Fax: 443-757-3515
Web page:

More information through EDIRC

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.:

in new window

  1. Makridakis, Spyros & Hibon, Michele, 2000. "The M3-Competition: results, conclusions and implications," International Journal of Forecasting, Elsevier, vol. 16(4), pages 451-476.
  2. Thomas B. Astebro & Yigal Gerchak, 2000. "Calculating the Expectation and Variance of the Present Value for a Random Profit Stream of Uncertain Duration," Post-Print hal-00648005, HAL.
  3. Zacharakis, Andrew L. & Meyer, G. Dale, 2000. "The potential of actuarial decision models: Can they improve the venture capital investment decision?," Journal of Business Venturing, Elsevier, vol. 15(4), pages 323-346, July.
  4. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
  5. Thomas Astebro & Irwin Bernhardt, 1999. "The Social Rate of Return to Canada's Inventor's Assistance Program," Post-Print hal-00480038, HAL.
  6. Alba, Joseph W & Marmorstein, Howard, 1987. " The Effects of Frequency Knowledge on Consumer Decision Making," Journal of Consumer Research, Oxford University Press, vol. 14(1), pages 14-25, June.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:52:y:2006:i:3:p:395-409. 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: (Mirko Janc)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.