Evaluating the Rationality of Managers' Sales Forecasts

Bert de Bruijn and Philip Hans Franses

No EI 2011-36, Econometric Institute Research Papers from Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute

Abstract: This paper deals with the analysis and evaluation of sales forecasts of managers, given that it is unknown how they constructed their forecasts. Our goal is to find out whether these forecasts are rational. To examine deviations from rationality, we argue that one has to approximate how the managers could have generated the forecasts. We describe several ways to construct these approximate expressions. The analysis of a large set of a single manager's forecasts for sales of pharmaceutical products illustrates the practical usefulness of our methodology.

Keywords: evaluating forecasts; fixedevent forecasts; forecast updates; intuition; rationality; sales forecasts (search for similar items in EconPapers)
JEL-codes: C22 C53 (search for similar items in EconPapers)
Date: 2011-11-14
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