A Behavioral Model of Forecasting: Naive Statistics on Mental Samples

References

• Anderson SP, De Palma A, Thisse JF (1992) Discrete Choice Theory of Product Differentiation (MIT Press, Cambridge, MA).Crossref, Google Scholar
• Armstrong JS (2001) Combining forecasts. Armstrong JS, ed. Principles of Forecasting: A Handbook for Researchers and Practitioners (Kluwer, New York), 417–439.Crossref, Google Scholar
• Becker-Peth M, Katok E, Thonemann UW (2013) Designing buyback contracts for irrational but predictable newsvendors. Management Sci. 59(8):1800–1816.Link, Google Scholar
• Bendoly E, Croson R, Goncalves P, Schultz K (2010) Bodies of knowledge for research in behavioral operations. Production Oper. Management 19(4):434–452.Crossref, Google Scholar
• Benjamin DJ, Rabin M, Raymond C (2016) A model of nonbelief in the law of large numbers. J. European Econom. Assoc. 14(2): 515–544.Crossref, Google Scholar
• Bolton GE, Katok E (2008) Learning by doing in the newsvendor problem: A laboratory investigation of the role of experience and feedback. Manufacturing Service Oper. Management 10(3):519–538.Link, Google Scholar
• Buehler R, Griffin D, Ross M (1994) Exploring the “planning fallacy”: Why people underestimate their task completion times. J. Personality Soc. Psych. 67(3):366–381.Crossref, Google Scholar
• Casella G, Berger RL (2002) Statistical Inference (Duxbury, Pacific Grove, CA).Google Scholar
• Chen L, Kök AG, Tong JD (2013) The effect of payment schemes on inventory decisions: The role of mental accounting. Management Sci. 59(2):436–451.Link, Google Scholar
• Chen Y, Su X, Zhao X (2012) Modeling bounded rationality in capacity allocation games with the quantal response equilibrium. Management Sci. 58(10):1952–1962.Link, Google Scholar
• Clemen RT (1989) Combining forecasts: A review and annotated bibliography. Internat. J. Forecasting 5:559–609.Crossref, Google Scholar
• Croson D, Croson R, Ren Y (2008) How to manage an overconfident newsvendor. Working paper, Southern Methodist University, Dallas.Google Scholar
• Croson R, Schultz K, Siemsen E, Yeo ML (2013) Behavioral operations: The state of the field. J. Oper. Management 31(1):1–5.Crossref, Google Scholar
• Cui S, Veeraraghavan S (2016) Blind queues: The impact of consumer beliefs on revenues and congestion. Management Sci. 62(12):3656–3672.Link, Google Scholar
• Denrell J (2005) Why most people disapprove of me: Experience sampling in impression formation. Psych. Rev. 112(4):951–978.Crossref, Google Scholar
• Einhorn HJ, Hogarth RM, Klempner E (1977) Quality of group judgment. Psych. Bull. 84(1):158–172.Crossref, Google Scholar
• Feiler DC, Kleinbaum AM (2015) Popularity, similarity and the network extraversion bias. Psych. Sci. 26(5):593–603.Crossref, Google Scholar
• Feiler DC, Tong JD, Larrick RP (2013) Biased judgment in censored environments. Management Sci. 59(3):573–591.Link, Google Scholar
• Fiedler K (2000) Beware of samples! A cognitive-ecological sampling approach to judgment biases. Psych. Rev. 107(4):659–676.Crossref, Google Scholar
• Fiedler K, Juslin P (2006) Taking the interface between mind and environment seriously. Fiedler K, Juslin P, eds. Information Sampling and Adaptive Cognition (Cambridge University Press, New York), 3–32.Google Scholar
• Fisher M, Raman A (1996) Reducing the cost of demand uncertainty through accurate response to early sales. Oper. Res. 44(1):87–99.Link, Google Scholar
• Fisher M, Raman A (2010) The New Science of Retailing: How Analytics Are Transforming the Supply Chain and Improving Performance (Harvard Business Press, Cambridge, MA).Google Scholar
• Gaur V, Kesavan S, Raman A, Fisher ML (2007) Estimating demand uncertainty using judgmental forecasts. Manufacturing Service Oper. Management 9(4):480–491.Link, Google Scholar
• Gigerenzer G, Hoffrage U (1995) How to improve Bayesian reasoning without instruction: Frequency formats. Psych. Rev. 102(4):684–704.Crossref, Google Scholar
• Gigerenzer G, Hoffrage U, Kleinbölting H (1991) Probabilistic mental models: A Brunswikian theory of confidence. Psych. Rev. 98(4):506–528.Crossref, Google Scholar
• Gino F, Pisano G (2008) Toward a theory of behavioral operations. Manufacturing Service Oper. Management 10(4):676–691.Link, Google Scholar
• Groeneveld RA, Meeden G (1977) The mode, median, and mean inequality. Amer. Statistician 31(3):120–121.Google Scholar
• Hadar L, Fox CR (2009) Information asymmetry in decision from description versus decision from experience. Judgment Decision Making 4(4):317–325.Google Scholar
• Hammond JH, Obermeyer WR, Raman A (1994) Making supply meet demand in an uncertain world. Harvard Bus. Rev. 72(3):83–93.Google Scholar
• Hansson P, Juslin P, Winman A (2008) The role of short-term memory capacity and task experience for overconfidence in judgment under uncertainty. J. Experiment. Psych. Learn., Memory, Cognition 34(5):1027–1042.Crossref, Google Scholar
• Haran U, Moore DA, Morewedge CK (2010) A simple remedy for overprecision in judgment. Judgment Decision Making 5(7):467–476.Crossref, Google Scholar
• Harrison J, March J (1984) Decision making and postdecision surprises. Admin. Sci. Quart. 29(1):26–42.Crossref, Google Scholar
• Henry R (1993) Group judgment accuracy: Reliability and validity of postdiscussion confidence judgments. Organ. Behav. Human Decision Processes 56(1):11–27.Crossref, Google Scholar
• Hertwig R, Barron G, Weber EU, Erev I (2004) Decisions from experience and the effect of rare events in risky choice. Psych. Sci. 15(8):534–539.Crossref, Google Scholar
• Huang T, Chen YJ (2015) Service systems with experience-based anecdotal reasoning customers. Production Oper. Management 24(5):778–790.Crossref, Google Scholar
• Huang T, Liu Q (2015) Strategic capacity management when customers have boundedly rational expectations. Production Oper. Management 24(12):1852–1869.Crossref, Google Scholar
• Huang T, Yu Y (2014) Sell probabilistic goods? A behavioral explanation for opaque selling. Marketing Sci. 33(5):743–759.Link, Google Scholar
• Huang T, Allon G, Bassamboo A (2013) Bounded rationality in service systems. Manufacturing Service Oper. Management 15(2):263–279.Link, Google Scholar
• Jain K, Mukherjee K, Bearden JN, Gaba A (2013) Unpacking the future: A nudge toward wider subjective confidence intervals. Management Sci. 59(9):1970–1987.Link, Google Scholar
• Juslin P, Wennerholm P, Olsson H (1999) Format dependence in subjective probability calibration. J. Experiment. Psych.: Learn., Memory, Cognition 25(4):1038–1052.Crossref, Google Scholar
• Juslin P, Winman A, Hansson P (2007) The naive intuitive statistician: A naive sampling model of intuitive confidence intervals. Psych. Rev. 114(3):678–703.Crossref, Google Scholar
• Kahneman D, Tversky A (1972) Subjective probability: A judgment of representativeness. Cognitive Psych. 3(3):430–454.Crossref, Google Scholar
• Kahneman D, Tversky A (1973) On the psychology of prediction. Psych. Rev. 80(4):237–251.Crossref, Google Scholar
• Kahneman D, Tversky A (1979a) Intuitive prediction: Biases and corrective procedures. TIMS Stud. Management Sci. 12(1):313–327.Google Scholar
• Kahneman D, Tversky A (1979b) Prospect theory: An analysis of decision under risk. Econometrica 47(2):263–292.Crossref, Google Scholar
• Kareev Y (2000) Seven (indeed, plus or minus two) and the detection of correlation. Psych. Rev. 107(2):397–402.Crossref, Google Scholar
• Kareev Y (2006) Good sampling, distorted views: The perception of variability. Fiedler K, Juslin P, eds. Information Sampling and Adaptive Cognition (Cambridge University Press, Cambridge, UK), 33–52.Google Scholar
• Kareev Y, Arnon S, Horwitz-Zeliger R (2002) On the misperception of variability. J. Experiment. Psych.: General 131(2):287–297.Crossref, Google Scholar
• Katok E, Pavlov V (2013) Fairness in supply chain contracts: A laboratory study. J. Oper. Management 31(3):129–137.Crossref, Google Scholar
• Klayman J, Soll JB, González-Vallejo C, Barlas S (1999) Overconfidence: It depends on how, what, and whom you ask. Organ. Behav. Human Decision Processes 79(3):216–247.Crossref, Google Scholar
• Kremer M, Minner S, Van Wassenhove LN (2010) Do random errors explain newsvendor behavior? Manufacturing Service Oper. Management 12(4):673–681.Link, Google Scholar
• Kremer M, Moritz B, Siemsen E (2011) Demand forecasting behavior: System neglect and change detection. Management Sci. 57(10):1827–1843.Link, Google Scholar
• Kremer M, Siemsen E, Thomas DJ (2016) The sum and its parts: Judgmental hierarchical forecasting. Management Sci. 62(9):2745–2764.Link, Google Scholar
• Kruger J, Evans M (2004) If you don’t want to be late, enumerate: Unpacking reduces the planning fallacy. J. Experiment. Soc. Psych. 40(5):586–598.Crossref, Google Scholar
• Kulkarni VG (2009) Modeling and Analysis of Stochastic Systems, 2nd ed. (CRC Press, Boca Raton, FL).Crossref, Google Scholar
• Laibson D (1997) Golden eggs and hyperbolic discounting. Quart. J. Econom. 112(2):443–478.Crossref, Google Scholar
• Larrick RP, Soll JB (2006) Intuitions about combining opinions: misappreciation of the averaging principle. Management Sci. 52(1):111–127.Link, Google Scholar
• Lee YS, Siemsen E (2017) Task decomposition and newsvendor decision making. Management Sci. 63(10):3226–3245.Link, Google Scholar
• Loch CH, Wu Y (2008) Social preferences and supply chain performance: An experimental study. Management Sci. 54(11):1835–1849.Link, Google Scholar
• Luce RD (1959) Individual Choice Behavior: A Theoretical Analysis (John Wiley & Sons, New York).Google Scholar
• March J (1996) Learning to be risk-averse. Psych. Rev. 103(2):309–319.Crossref, Google Scholar
• McFadden (1981) Econometric models of probabilistic choice. Manski C, McFadden D, eds. Structural Analysis of Discrete Data (MIT Press, Cambridge, MA), 198–272.Google Scholar
• McKelvey RD, Palfrey TR (1995) Quantal response equilibria for normal form games. Games Econom. Behav. 10(1):6–38.Crossref, Google Scholar
• Moore DA, Healy PJ (2008) The trouble with overconfidence. Psych. Rev. 115(2):502–517.Crossref, Google Scholar
• Moritz BB, Hill AV, Donohue KL (2013) Individual differences in the newsvendor problem: Behavior and cognitive reflection. J. Oper. Management 31(1):72–85.Crossref, Google Scholar
• Moritz B, Siemsen E, Kremer M (2014) Judgmental forecasting: Cognitive reflection and decision speed. Production Oper. Management 23(7):1146–1160.Crossref, Google Scholar
• Nagarajan M, Shechter S (2013) Prospect theory and the newsvendor problem. Management Sci. 60(4):1057–1062.Link, Google Scholar
• Naor P (1969) The regulation of queue size by levying tolls. Econometrica 37(1):15–24.Crossref, Google Scholar
• Nosofsky RM, Palmeri TJ (1997) An exemplar-based random walk model of speede classification. Psych. Rev. 104(2):266–300.Crossref, Google Scholar
• Osborne M, Rubinstein A (1998) Games with procedurally rational players. Amer. Econom. Rev. 88(4):834–847.Google Scholar
• Özer Ö, Zheng Y, Chen KY (2011) Trust in forecast information sharing. Management Sci. 57(6):1111–1137.Link, Google Scholar
• Plambeck EL, Wang Q (2013) Implications of hyperbolic discounting for optimal pricing and scheduling of unpleasant services that generate future benefits. Management Sci. 59(8):1927–1946.Link, Google Scholar
• Popescu I, Wu Y (2007) Dynamic pricing strategies with reference effects. Oper. Res. 55(3):413–429.Link, Google Scholar
• Rabin M (2002) Inference by believers in the law of small numbers. Quart. J. Econom. 117(3):775–816.Crossref, Google Scholar
• Rabin M (2013) Incorporating limited rationality into economics. J. Econom. Literature 51(2):528–543.Crossref, Google Scholar
• Rabin M, Vayanos D (2010) The gambler’s and hot-hand fallacies: Theory and applications. Rev. Econom. Stud. 77(2):730–778.Crossref, Google Scholar
• Rakow T, Demes KA, Newell BR (2008) Biased samples not mode of presentation: Re-examining the apparent under-weighting of rare events in experience-based choice. Organ. Behav. Human Decision Processes 106(2):168–179.Crossref, Google Scholar
• Rapoport A, Budescu DV (1992) Generation of random series in two-person strictly competitive games. J. Experiment. Psych.: General 121(3):352–363.Crossref, Google Scholar
• Rapoport A, Budescu DV (1997) Randomization in individual choice behavior. Psych. Rev. 104(3):603–617.Crossref, Google Scholar
• Ren Y, Croson R (2013) Overconfidence in newsvendor orders: An experimental study. Management Sci. 59(11):2502–2517.Link, Google Scholar
• Rudi N, Drake D (2014) Observation bias: The impact of demand censoring on newsvendor level and adjustment behavior. Management Sci. 60(5):1334–1345.Link, Google Scholar
• Schweitzer ME, Cachon GP (2000) Decision bias in the newsvendor problem with a known demand distribution: Experimental evidence. Management Sci. 46(3):404–420.Link, Google Scholar
• Silva JS, Tenreyro S (2006) The log of gravity. Rev. Econom. Statist. 88(4):641–658.Crossref, Google Scholar
• Simon HA (1955) A behavioral model of rational choice. Quart. J. Econom. 69(1):99–118.Crossref, Google Scholar
• Smith J, Winkler R (2006) The optimizer’s curse: Skepticism and postdecision surprise in decision analysis. Management Sci. 52(3):311–322.Link, Google Scholar
• Sniezek J, Henry R (1989) Accuracy and confidence in group judgment. Organ. Behav. Human Decision Processes 43(1):1–28.Crossref, Google Scholar
• Spiegler R (2006a) Competition over agents with boundedly rational expectations. Theoret. Econom. 1(2):207–231.Google Scholar
• Spiegler R (2006b) The market for quacks. Rev. Econom. Stud. 73(4):1113–1131.Crossref, Google Scholar
• Spiegler R (2011) Bounded Rationality and Industrial Organization (Oxford University Press, New York).Crossref, Google Scholar
• Soll JB (1996) Determinants of overconfidence and miscalibration: The roles of random error and ecological structure. Organ. Behav. Human Decision Processes 65(2):117–137.Crossref, Google Scholar
• Soll JB, Klayman J (2004) Overconfidence in interval estimates. J. Experiment. Psych.: Learn., Memory, Cognition 30(2):299–314.Crossref, Google Scholar
• Soll JB, Mannes AE (2011) Judgmental aggregation strategies depend on whether the self is involved. Internat. J. Forecasting 27(1):81–102.Crossref, Google Scholar
• Su X (2008) Bounded rationality in newsvendor models. Manufacturing Service Oper. Management 10(4):566–589.Link, Google Scholar
• Surowiecki J (2005) The Wisdom of Crowds (Anchor, New York).Google Scholar
• Thaler R (1985) Mental accounting and consumer choice. Marketing Sci. 4(3):199–214.Link, Google Scholar
• Thaler RH (1988) Anomalies: The winner’s curse. J. Econom. Perspect. 2(1):191–202.Crossref, Google Scholar
• Tong J, Ivantsova A, Feiler D (2016) How random error and intelligent choice yield overoptimism: An experimental examination of the optimizer’s curse. Working paper, University of Wisconsin–Madison, Madison. Google Scholar
• Tsai CI, Klayman J, Hastie R (2008) Effects of amount of information on judgment accuracy and confidence. Organ. Behav. Human Decision Processes 107(2):97–105.Crossref, Google Scholar
• Tversky A, Kahneman D (1971) Belief in the law of small numbers. Psych. Bull. 76(2):105–110.Crossref, Google Scholar
• Tversky A, Kahneman D (1973) Availability: A heuristic for judging frequency and probability. Cognitive Psych. 5(2):207–232.Crossref, Google Scholar
• Weber EU, Johnson EJ (2009) Mindful judgment and decision making. Annual Rev. Psych. 60:53–85.Crossref, Google Scholar
• Yaniv I, Kleinberger E (2000) Advice taking in decision making: Egocentric discounting and reputation formation. Organ. Behav. Human Decision Processes 83(2):260–281.Crossref, Google Scholar
• Zarnowitz V, Lambros LA (1987) Consensus and uncertainty in economic prediction. J. Political Econom. 95(3):591–621.Crossref, Google Scholar
• Zhang Y, Donohue K, Cui TH (2016) Contract preferences for the loss averse supplier: Buyback versus revenue sharing. Management Sci. 62(6):1734–1754.Link, Google Scholar
• Zipkin PH (2000) Foundations of Inventory Management (McGraw-Hill, New York).Google Scholar