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- Title
The Effectiveness of Simple Decision Heuristics: Forecasting Commercial Success for Early-Stage Ventures.
- Authors
Åstebro, Thomas; Elhedhli, Samir
- 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.
- Subjects
DECISION making; INVENTIONS; MARKET potential; FORECASTING; HEURISTIC; CHOICE (Psychology); DECISION theory; MULTIPLE criteria decision making; HUMAN information processing; NEW product development; PROTOTYPES; NEW business enterprises
- Publication
Management Science, 2006, Vol 52, Issue 3, p395
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.1050.0468