Which Dreams Come True? Endogeneity, Industry Structure and Forecasting Accuracy

20 Pages Posted: 13 Nov 2004

See all articles by Michael L. Barnett

Michael L. Barnett

Rutgers Business School, Newark & New Brunswick

William H. Starbuck

University of Oregon - Charles H. Lundquist School of Business; New York University (NYU) - Department of Management and Organizational Behavior

Narryan Pant

Clean Slate Consulting Pte. LTD.

Abstract

Forecasts are plentiful. Accurate long-range forecasts are not. But some forecasts are more accurate than others are and a few are very accurate. In this paper, we first explore the case of Moore's Law, a forecast that has proven quite accurate for almost 40 years. We illustrate how expectations that Moore's Law will continue to be accurate actually make it accurate. Based on the insights of this case, we hypothesize that two factors facilitate such self-fulfilling forecasts and so make accuracy more possible. We test these hypotheses on a set of 3142 forecasts about US manufacturing industries during the 1970s. We find that high industry concentration and high control over the predicted variable tend to increase the accuracy of forecasts.

Keywords: Forecasting, endogeneity, industry structure

JEL Classification: M10

Suggested Citation

Barnett, Michael L. and Starbuck, William H. and Pant, P. Narrayan, Which Dreams Come True? Endogeneity, Industry Structure and Forecasting Accuracy. Industrial and Corporate Change, Vol. 12, No. 4, pp. 653-672, 2003, Available at SSRN: https://ssrn.com/abstract=617501

Michael L. Barnett (Contact Author)

Rutgers Business School, Newark & New Brunswick ( email )

NJ
United States

HOME PAGE: http://www.business.rutgers.edu

William H. Starbuck

University of Oregon - Charles H. Lundquist School of Business ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States

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

44 West 4th Street
New York, NY 10012
United States

P. Narrayan Pant

Clean Slate Consulting Pte. LTD. ( email )

10 Holland Hill #05-06
Singapore 278733
Japan

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