Professional vs Amateur Judgment Accuracy: The Case of Foreign Exchange Rates

Organizational Behavior and Human Decision Processes, Vol. 91, pp. 169-185, 2003

Posted: 23 Nov 2008

See all articles by J. Frank Yates

J. Frank Yates

University of Michigan at Ann Arbor - Department of Psychology; University of Michigan, Stephen M. Ross School of Business

Can Simga-Mugan

affiliation not provided to SSRN

Sule Oztin

affiliation not provided to SSRN

Dilek Onkal

Bilkent University

Date Written: 2003

Abstract

Highly knowledgeable people often fail to achieve highly accurate judgments, a phenomenon sometimes called the ''processperformance paradox.'' The present research tested for this paradox in foreign exchange (FX) rate forecasting. Forty professional and 57 sophisticated amateur forecasters made one-day and one-week-ahead FX predictions in deterministic and probabilistic formats. Among the conclusions indicated by the results are: (a) professional accuracy usually surpasses amateur accuracy, although many amateurs outperform many professionals; (b) professionals appear to achieve high proficiency via heavy reliance on predictive information (unlike what has been observed before, e.g., for stock prices); (c) forecast format strongly affects judgment accuracy and processes; and (d) apparent overconfidence can transform itself into underconfidence depending on when and how forecasters must articulate their confidence.

Suggested Citation

Yates, J. Frank and Yates, J. Frank and Simga-Mugan, Can and Oztin, Sule and Onkal, Dilek, Professional vs Amateur Judgment Accuracy: The Case of Foreign Exchange Rates (2003). Organizational Behavior and Human Decision Processes, Vol. 91, pp. 169-185, 2003, Available at SSRN: https://ssrn.com/abstract=1298544

J. Frank Yates

University of Michigan at Ann Arbor - Department of Psychology ( email )

Ann Arbor, MI 48109
United States
+1 734 763 2092 (Phone)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Can Simga-Mugan

affiliation not provided to SSRN

Sule Oztin

affiliation not provided to SSRN

Dilek Onkal (Contact Author)

Bilkent University ( email )

Bilkent University
Faculty of Business Administration
Bilkent, Ankara 06800
Turkey
+90.312.290.1596 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
657
PlumX Metrics