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http://ssrn.com/abstract=1621800
 
 

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Predicting the Next Big Thing: Success as a Signal of Poor Judgment


Jerker Denrell


Independent

Christina Fang


New York University (NYU) - Department of Management and Organizational Behavior

June 7, 2010

Management Science, Vol. 56, No. 10, pp. 1653-1667, 2010

Abstract:     
Successfully predicting that something will become a big hit seems impressive. Managers and entrepreneurs who have made successful predictions and have invested money on this basis are promoted, become rich, and may end up on the cover of business magazines. In this paper, we show that an accurate prediction about such an extreme event, e.g., a big hit, may in fact be an indication of poor rather than good forecasting ability. We first demonstrate how this conclusion can be derived from a formal model of forecasting. We then illustrate that the basic result is consistent with data from two lab experiments as well as field data on professional forecasts from the Wall Street Journal Survey of Economic Forecasts.

Number of Pages in PDF File: 38

Keywords: Managerial Foresight, Forecasting, Resource Based View of the Firm

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Date posted: June 7, 2010 ; Last revised: June 14, 2014

Suggested Citation

Denrell, Jerker and Fang, Christina, Predicting the Next Big Thing: Success as a Signal of Poor Judgment (June 7, 2010). Management Science, Vol. 56, No. 10, pp. 1653-1667, 2010. Available at SSRN: http://ssrn.com/abstract=1621800

Contact Information

Jerker Denrell
Independent
No Address Available
Christina Fang (Contact Author)
New York University (NYU) - Department of Management and Organizational Behavior ( email )
44 West 4th Street
New York, NY 10012
United States
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