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The effectiveness of simple decision heuristics : Forecasting commercial success for early-stage ventures

Author

Listed:
  • Thomas Astebro

    (Joseph L. Rotman School of Management - University of Toronto)

  • Samir Elhedhli

Abstract

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.

Suggested Citation

  • Thomas Astebro & Samir Elhedhli, 2006. "The effectiveness of simple decision heuristics : Forecasting commercial success for early-stage ventures," Post-Print hal-00476866, HAL.
    • Handle: RePEc:hal:journl:hal-00476866
    DOI: 10.1287/mnsc.1050.0468
    as

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