Professional vs. amateur judgment accuracy: The case of foreign exchange rates

Dilek Önkal*, J. Frank Yates, Can Simga-Mugan, Şule Öztin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

40 Citations (Scopus)

Abstract

Highly knowledgeable people often fail to achieve highly accurate judgments, a phenomenon sometimes called the "process-performance paradox." The present research tested for this paradox in foreign exchange (FX) rate forecasting. Forty professional and 57 sophisticated amateur forecasters made one-day and one-week-ahead FX predictions in deterministic and probabilistic formats. Among the conclusions indicated by the results are: (a) professional accuracy usually surpasses amateur accuracy, although many amateurs outperform many professionals; (b) professionals appear to achieve high proficiency via heavy reliance on predictive information (unlike what has been observed before, e.g., for stock prices); (c) forecast format strongly affects judgment accuracy and processes; and (d) apparent overconfidence can transform itself into underconfidence depending on when and how forecasters must articulate their confidence.

Original languageEnglish
Pages (from-to)169-185
Number of pages17
JournalOrganizational Behavior and Human Decision Processes
Volume91
Issue number2
Early online date16 Jun 2003
DOIs
Publication statusPublished - Jul 2003
Externally publishedYes

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