Green's study (Int. J. Forecasting (forthcoming)) on the accuracy of forecasting methods for conflicts does well against traditional scientific criteria. Moreover, it is useful, as it examines actual problems by comparing forecasting methods as they would be used in practice. Some biases exist in the design of the study and they favor game theory. As a result, the accuracy gain of game theory over unaided judgment may be illusory, and the advantage of role playing over game theory is likely to be greater than the 44% error reduction found by Green. The improved accuracy of role playing over game theory was consistent across situations. For those cases that simulated interactions among people with conflicting roles, game theory was no better than chance (28% correct), whereas role-playing was correct in 61% of the predictions. 2002 International Institute of Forecasters. Published by Elsevier Science B.V. All rights reserved.
Widely used methods of automated forecasting for production and inventory control contribute to the severity of recessions. We describe an approach to forecasting that should reduce the damage caused by the use of current statistical packages when encountering a substantial change in business conditions.
This article introduces this JBR Special Issue on simple versus complex methods in forecasting. Simplicity in forecasting requires that (1) method, (2) representation of cumulative knowledge, (3) relationships in models, and (4) relationships among models, forecasts, and decisions are all sufficiently uncomplicated as to be easily understood by decision-makers. Our review of studies comparing simple and complex methods - including those in this special issue - found 97 comparisons in 32 papers. None of the papers provide a balance of evidence that complexity improves forecast accuracy. Complexity increases forecast error by 27 percent on average in the 25 papers with quantitative comparisons. The finding is consistent with prior research to identify valid forecasting methods: all 22 previously identified evidence-based forecasting procedures are simple. Nevertheless, complexity remains popular among researchers, forecasters, and clients. Some evidence suggests that the popularity of complexity may be due to incentives: (1) researchers are rewarded for publishing in highly ranked journals, which favor complexity; (2) forecasters can use complex methods to provide forecasts that support decision-makers’ plans; and (3) forecasters’ clients may be reassured by incomprehensibility. Clients who prefer accuracy should accept forecasts only from simple evidence-based procedures. They can rate the simplicity of forecasters’ procedures using the questionnaire at simple-forecasting.com.