Exploiting linear partial information for optimal use of forecasts. With an application to U.S. economic policy
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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in: International Journal of Forecasting, Jahrgang 4, Nr. 1, 01.01.1988, S. 15-32.
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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TY - JOUR
T1 - Exploiting linear partial information for optimal use of forecasts. With an application to U.S. economic policy
AU - Kofler, Edward
AU - Zweifel, Peter
PY - 1988/1/1
Y1 - 1988/1/1
N2 - Traditionally, the link between forecasting and decision making rests on the assumption of a known distribution for the future values of predicted variables. In practice, however, forecasts tend to offer little more than Linear Partial Information (LPI), typically of the form, 'State 1 is more likely to prevail than state 2, and state 2 more likely to prevail than state 3, among five possible states'. This paper shows how such fuzzy LPI statements can be exploited in decision making. For an illustration, LPI analysis is used for determining (ex post) the optimal economic policy to be followed by the Carter Administration with a view to ensuring reelection in 1980. An optimal adaption of that policy occasioned by the fallible 1980 forecasts made by the Council of Economic Advisors is also derived.
AB - Traditionally, the link between forecasting and decision making rests on the assumption of a known distribution for the future values of predicted variables. In practice, however, forecasts tend to offer little more than Linear Partial Information (LPI), typically of the form, 'State 1 is more likely to prevail than state 2, and state 2 more likely to prevail than state 3, among five possible states'. This paper shows how such fuzzy LPI statements can be exploited in decision making. For an illustration, LPI analysis is used for determining (ex post) the optimal economic policy to be followed by the Carter Administration with a view to ensuring reelection in 1980. An optimal adaption of that policy occasioned by the fallible 1980 forecasts made by the Council of Economic Advisors is also derived.
KW - Management studies
UR - http://www.scopus.com/inward/record.url?scp=38249031212&partnerID=8YFLogxK
U2 - 10.1016/0169-2070(88)90007-6
DO - 10.1016/0169-2070(88)90007-6
M3 - Journal articles
AN - SCOPUS:38249031212
VL - 4
SP - 15
EP - 32
JO - International Journal of Forecasting
JF - International Journal of Forecasting
SN - 0169-2070
IS - 1
ER -