Probability Forecasts and Their Combination: A Research Perspective

33 Pages Posted: 10 Oct 2018 Last revised: 29 Mar 2019

See all articles by Robert L. Winkler

Robert L. Winkler

Duke University - Fuqua School of Business

Yael Grushka-Cockayne

University of Virginia - Darden School of Business; Harvard University - Business School (HBS)

Kenneth C. Lichtendahl

University of Virginia - Darden School of Business

Victor Richmond Jose

Georgetown University - McDonough School of Business

Date Written: October 1, 2018

Abstract

We explore some recent, and not so recent, developments concerning the use of probability forecasts and their combination in decision making. Despite these advances, challenges still exist. We expand on some important challenges influencing the “goodness” of combined probability forecasts such as miscalibration, dependence among forecasters, and selecting an appropriate evaluation measure, while connecting the processes of aggregating and evaluating forecasts to decision making. Through three important applications from the domains of meteorology, economics, and political science, we illustrate state-of-the-art usage of probability forecasts: how they are combined, evaluated, and communicated to stakeholders. We expect to see greater use and aggregation of probability forecasts, especially given developments in statistical modeling, machine learning, and expert forecasting; the popularity of forecasting competitions; and the increased reporting of probabilities in the media. Our vision is that increased exposure to and improved visualizations of probability forecasts will enhance the public’s understanding of probabilities and how they can contribute to better decisions.

Suggested Citation

Winkler, Robert L. and Grushka-Cockayne, Yael and Lichtendahl, Kenneth C. and Jose, Victor Richmond, Probability Forecasts and Their Combination: A Research Perspective (October 1, 2018). Available at SSRN: https://ssrn.com/abstract=3258627 or http://dx.doi.org/10.2139/ssrn.3258627

Robert L. Winkler

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Yael Grushka-Cockayne (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

HOME PAGE: http://https://www.hbs.edu/faculty/Pages/profile.aspx?facId=263650

Kenneth C. Lichtendahl

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Victor Richmond Jose

Georgetown University - McDonough School of Business ( email )

544 Hariri Bldg
37th and O Sts NW
Washington, DC 20057
United States

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