Comparing the calibration and coherence of numerical and verbal probability judgements

Article Abstract:

The use of verbal probability judgements in decision analysis is examined. While numerical probability estimates are the norm, the use of verbal probability expressions in communicating opinions is gaining interest. Quantitative evaluation of verbal judgements that use a limited and individually selected and scaled vocabulary is done using a new method which enables a comparison, under three payoff conditions, to standard numerical response. Since no interaction between response mode and payoffs occurs, the probabilities obtained for the two response modes are very similar. Complementary event judgements are found to be additive. The verbal and numerical response modes differed in terms of their use of the central responsecategory, which was used more frequently in the latter than in the former. Also, verbal overconfidence was greater than numerical overconfidence.

Methods, Decision-making, Decision making, Probabilities, Probability theory

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Aggregating subjective forecasts: some empirical results

Article Abstract:

Aggregating the forecasts of 13 executives, managers and sales personnel at Time, Inc. on the number of advertising pages sold over a 14-year period produced increasingly better results as more individuals' forecasts are added to the sample. However, optimal forecasts could be obtained by combining between two and five individual predictions. Different weightings produced minor improvements in forecasting, and it is demonstrated that differential methods of weighting are more accurate than equal weighting. The weighting methods analyzed include ex post methods, which consider individuals' prior forecasting accuracy, and ex ante methods, which are based on both subjective and objective measurements of individuals' forecasting accuracy.

Analysis, Forecasts and trends, Statistics, Statistics (Data), Forecasting

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A Fuzzy Set Approach to Aggregating Internal Control Judgements

Article Abstract:

An evaluation of internal control systems is an important part of auditing responsibility. An independent auditor may be required to render an opinion on internal controls as well as on the financial statements. Auditors have not yet accepted mathematical models for control. A linguistic model is suggested. It uses the theory of fuzzy sets to aggregate common linguistic values and returns a linquistic aggregate evaluation of the control system. An example is given.

Management science, Accounting, Auditing, Set theory, Fuzzy Sets, Sets, Operations Research

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