Forecasting is required in many situations. Stocking an inventory may require forecasts of demand months in advance. Telecommunication routing requires traffic forecasts a few minutes ahead. Whatever the circumstances or time horizons involved, forecasting is an important aid in effective and efficient planning. This textbook provides a comprehensive introduction to forecasting methods and presents enough information about each method for readers to use them sensibly.

I investigate whether the precision of an earnings forecast interacts with environmental uncertainty to affect investors' perceptions of management credibility, future firm growth, and firm stock price. I find that investors respond to a misalignment between environmental uncertainty and forecast precision by lowering their growth expectations and stock price estimates (lowering growth expectations and penalizing price estimates when point forecasts are issued in relatively uncertain environments or range forecasts are issued in relatively certain environments). I find a similar pattern of results for investors' perceptions of management credibility. Perceptions of management credibility mediate the impact of misalignment on investors' perceptions of future growth but do not mediate the impact of misalignment on stock price estimates. My findings have implications for managers issuing forecasts and for investors interpreting forecasts.

I investigate whether alignment between individual investors' expectations about forecast precision and actual forecast precision affects their estimates of firm value, and whether this relationship is mediated by individual investors' perceptions of management credibility and future firm growth. Experimental results confirm that when expected and actual forecast precision align, individual investors estimate higher firm stock prices than when expected and actual forecast precision do not align. I also provide evidence of a mediation path through which the misalignment between expected and actual forecast precision affects individual investors' perceptions of management credibility, future firm growth, and estimates of firm stock price. My findings help reconcile inconsistencies in prior earnings forecast literature and inform managers and researchers about strategies that lead to higher perceptions of management credibility and firm value.

NEW YORK TIMES BESTSELLER • NAMED ONE OF THE BEST BOOKS OF THE YEAR BY THE ECONOMIST “The most important book on decision making since Daniel Kahneman's Thinking, Fast and Slow.”—Jason Zweig, The Wall Street Journal Everyone would benefit from seeing further into the future, whether buying stocks, crafting policy, launching a new product, or simply planning the week’s meals. Unfortunately, people tend to be terrible forecasters. As Wharton professor Philip Tetlock showed in a landmark 2005 study, even experts’ predictions are only slightly better than chance. However, an important and underreported conclusion of that study was that some experts do have real foresight, and Tetlock has spent the past decade trying to figure out why. What makes some people so good? And can this talent be taught? In Superforecasting, Tetlock and coauthor Dan Gardner offer a masterwork on prediction, drawing on decades of research and the results of a massive, government-funded forecasting tournament. The Good Judgment Project involves tens of thousands of ordinary people—including a Brooklyn filmmaker, a retired pipe installer, and a former ballroom dancer—who set out to forecast global events. Some of the volunteers have turned out to be astonishingly good. They’ve beaten other benchmarks, competitors, and prediction markets. They’ve even beaten the collective judgment of intelligence analysts with access to classified information. They are "superforecasters." In this groundbreaking and accessible book, Tetlock and Gardner show us how we can learn from this elite group. Weaving together stories of forecasting successes (the raid on Osama bin Laden’s compound) and failures (the Bay of Pigs) and interviews with a range of high-level decision makers, from David Petraeus to Robert Rubin, they show that good forecasting doesn’t require powerful computers or arcane methods. It involves gathering evidence from a variety of sources, thinking probabilistically, working in teams, keeping score, and being willing to admit error and change course. Superforecasting offers the first demonstrably effective way to improve our ability to predict the future—whether in business, finance, politics, international affairs, or daily life—and is destined to become a modern classic.

This paper argues that the relation between financial analysts' earnings forecast accuracy and their recommendation profitability has to be augmented by the extent of commonality in their forecast errors. We show that while accuracy is positively related to expected performance, the correlation in forecasting errors has a negative impact. This implies that a monotonic relationship between ex ante identifiable forecast accuracy and ex post recommendation profitability does not need to hold. Thus, agents may be better off by making comparatively large but less correlated errors, than making precise but highly correlated forecasts.

El Nino has been with us for centuries, but now we can forcast it, and thus can prepare far in advance for the extreme climatic events it brings. The emerging ability to forecast climate may be of tremendous value to humanity if we learn how to use the information well. How does society cope with seasonal-to-interannual climatic variations? How have climate forecasts been usedâ€"and how useful have they been? What kinds of forecast information are needed? Who is likely to benefit from forecasting skill? What are the benefits of better forecasting? This book reviews what we know about these and other questions and identifies research directions toward more useful seasonal-to-interannual climate forecasts. In approaching their recommendations, the panel explores: Vulnerability of human activities to climate. State of the science of climate forecasting. How societies coevolved with their climates and cope with variations in climate. How climate information should be disseminated to achieve the best response. How we can use forecasting to better manage the human consequences of climate change.

A comprehensive collection of the field's most provocative, influential new work Business Forecasting compiles some of the field's important and influential literature into a single, comprehensive reference for forecast modeling and process improvement. It is packed with provocative ideas from forecasting researchers and practitioners, on topics including accuracy metrics, benchmarking, modeling of problem data, and overcoming dysfunctional behaviors. Its coverage includes often-overlooked issues at the forefront of research, such as uncertainty, randomness, and forecastability, as well as emerging areas like data mining for forecasting. The articles present critical analysis of current practices and consideration of new ideas. With a mix of formal, rigorous pieces and brief introductory chapters, the book provides practitioners with a comprehensive examination of the current state of the business forecasting field. Forecasting performance is ultimately limited by the 'forecastability' of the data. Yet failing to recognize this, many organizations continue to squander resources pursuing unachievable levels of accuracy. This book provides a wealth of ideas for improving all aspects of the process, including the avoidance of wasted efforts that fail to improve (or even harm) forecast accuracy. Analyzes the most prominent issues in business forecasting Investigates emerging approaches and new methods of analysis Combines forecasts to improve accuracy Utilizes Forecast Value Added to identify process inefficiency The business environment is evolving, and forecasting methods must evolve alongside it. This compilation delivers an array of new tools and research that can enable more efficient processes and more accurate results. Business Forecasting provides an expert's-eye view of the field's latest developments to help you achieve your desired business outcomes.