Brain imaging and forecasting: insights from judgmental model selection

Han, Weiwei, Wang, Xun ORCID: https://orcid.org/0000-0001-7800-726X, Petropoulos, Fotios and Wang, Jing 2019. Brain imaging and forecasting: insights from judgmental model selection. Omega: The International Journal of Management Science 87 , pp. 1-9. 10.1016/j.omega.2018.11.015

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Abstract

In this article, we shed light on the differences between two judgmental forecasting approaches for model selection — forecast selection and pattern identification — with regard to their forecasting performance and underlying cognitive processes. We designed a laboratory experiment using real-life time series as stimuli to record subjects' selections as well as their brain activity by means of electroencephalography (EEG). We found that their cognitive load, measured by the amplitude of parietal P300, can be effectively used as a neurological indicator of identification and forecast accuracy. As a result, judgmental forecasting based on pattern identification outperforms forecast selection. Time series with low trendiness and high noisiness have low forecasting accuracy because of the high cognitive load induced.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Publisher:	Elsevier
ISSN:	0305-0483
Date of First Compliant Deposit:	7 December 2018
Date of Acceptance:	15 November 2018
Last Modified:	21 Nov 2024 07:45
URI:	https://orca.cardiff.ac.uk/id/eprint/117350

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