Knowledge@Wharton: Want Better Forecasting? Silence the Noise

“From predicting the weather to possible election outcomes, forecasts have a wide range of applications. Research shows that many forces can interfere with the process of predicting outcomes accurately — among them are bias, information and noise. Barbara Mellers, a Wharton marketing professor and Penn Integrates Knowledge (PIK) professor at the University of Pennsylvania, and Ville Satopӓӓ, assistant professor of technology and operations management at INSEAD, examined these forces and found that noise was a much bigger factor than expected in the accuracy of predictions. The professors recently spoke with Knowledge@Wharton about their working paper, “Bias, Information, Noise: The BIN Model of Forecasting.” Listen to the interview at Knowledge@Wharton