Abstract
An experiment is reported which compares the judgmental forecasting performance of experts and novices using simulated currency series with differing trend strengths. Analyses of directional probability forecasts reveal: (1) significant effects of trend strength on all aspects of predictive performance being studied, with evidence for the hard-easy effect where overconfidence is exhibited on weak (i.e., more difficult) trends, while underconfidence is shown on strong (i.e., less difficult) trends; (2) lower performance of experts on relative accuracy and profitability measures, reflecting experts' resistance to strong trends; (3) better overall performance on negative trends; and (4) superior performance of composite forecasts. Possible explanations are offered for these results and future research directions are outlined.
| Original language | English |
|---|---|
| Pages (from-to) | 241-256 |
| Number of pages | 16 |
| Journal | International Journal of Forecasting |
| Volume | 19 |
| Issue number | 2 |
| Early online date | 22 Nov 2002 |
| DOIs | |
| Publication status | Published - Apr 2003 |
| Externally published | Yes |
Keywords
- Exchange rate
- Expertise
- Forecasting
- Judgement
- Probability