AN EXPERIMENTAL EXAMINATION OF SUBJECTIVE FORECAST COMBINATION

Little is known about how individuals subjectively combine forecasts. This study uses two experiments to investigate how subjective forecast combination is influenced by both features of the decision context an d characteristics of expert forecasters (financial analysts) who provi de the individual forecasts. Experimental results indicate that indivi duals often are conservative in their combined forecasts; this conserv atism is related to both the intended purpose of the forecast and indi viduals' beliefs that analysts' forecasts typically are optimistic. Ot her results show that individuals' combined forecasts on average refle ct the relative historical accuracy of forecasters but not the relativ e historical dependence between forecasters. Although some subjects us ed dependence correctly in their combined forecasts, others either use d it incorrectly or indicated that they did not know how it should be used. These results suggest that subjectively combined forecasts are l ikely to differ from those based on theoretical forecast combination m odels.