Combining Probability Forecasts: 60% and 60% Is 60%, but Likely and Likely is Very Likely

Management Science

57 Pages Posted: 17 Sep 2019 Last revised: 27 Oct 2020

See all articles by Robert Mislavsky

Robert Mislavsky

Johns Hopkins University - Carey Business School

Celia Gaertig

University of Chicago - Booth School of Business

Date Written: September 8, 2020

Abstract

How do we combine others’ probability forecasts? Prior research has shown that when advisors provide numeric probability forecasts, people typically average them (i.e., they move closer to the average advisor’s forecast). However, what if the advisors say that an event is “likely” or “probable?” In eight studies (N = 7,334), we find that people are more likely to act as if they “count” verbal probabilities (i.e., they move closer to certainty than any individual advisor’s forecast) than they are to “count” numeric probabilities. For example, when the advisors both say an event is “likely,” participants will say that it is “very likely.” This effect occurs for both probabilities above and below 50%, for hypothetical scenarios and real events, and when presenting the others’ forecasts simultaneously or sequentially. We also show that this combination strategy carries over to subsequent consumer decisions that rely on advisors’ likelihood judgments. We discuss and rule out several candidate mechanisms for our effect.

Keywords: uncertainty, forecasting, verbal probabilities, combining judgments, combining forecasts, predictions

Suggested Citation

Mislavsky, Robert and Gaertig, Celia, Combining Probability Forecasts: 60% and 60% Is 60%, but Likely and Likely is Very Likely (September 8, 2020). Management Science, Available at SSRN: https://ssrn.com/abstract=3454796 or http://dx.doi.org/10.2139/ssrn.3454796

Robert Mislavsky (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Celia Gaertig

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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