Further Evidence on Game Theory, Simulated Interaction, and Unaided Judgement for Forecasting Decisions in Conflicts
Monash University Econometrics and Business Statistics Working Paper No. 18/04
33 Pages Posted: 1 Mar 2005
Date Written: 2004
If people in conflicts can more accurately forecast how others will respond, that should help them make better decisions. Contrary to expectations, earlier research found game theorists' forecasts less accurate than forecasts from student role players. To assess whether game theorists had been disadvantaged by the selection of conflicts, I obtained forecasts for three new conflicts of types preferred by game theory experts. As before, role-players in simulated interactions were students and other students provided forecasts using their judgement. For eight conflicts including five from earlier research, 102 forecasts by 23 game theorists were no more accurate (31%) than 357 forecasts by students who used unaided judgement (32%). Of 105 simulated-interaction forecasts, 62% were accurate: an average error reduction of 47% over game-theorist forecasts. Forecasts can sometimes have value without being strictly accurate. Assessing the usefulness of forecasts led to the same conclusions about the relative merits of the methods.
Keywords: accuracy, methods, role playing, usefulness
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