Bias, Information, Noise: The BIN Model of Forecasting
75 Pages Posted: 7 Apr 2020 Last revised: 7 Oct 2020
Date Written: February 19, 2020
A four-year series of subjective-probability forecasting tournaments sponsored by the U.S. intelligence community revealed a host of replicable drivers of predictive accuracy, including experimental interventions such as training in probabilistic reasoning, anti-groupthink teaming, and tracking-of-talent. Drawing on these data, we propose a Bayesian BIN model (Bias, Information, Noise) for disentangling the underlying processes that enable forecasters and forecasting methods to improve – either by tamping down bias and noise in judgment or by ramping up the efficient extraction of valid information from the environment. The BIN model reveals that noise reduction plays a surprisingly consistent role across all three methods of enhancing performance. We see the BIN method as useful in focusing managerial interventions on what works when and why in a wide range of domains. An R-package called BINtools implements our method and is available on the first author’s personal website.
Keywords: Bayesian Statistics, Judgmental Forecasting, Partial Information, Shapley Value, Wisdom of Crowds
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