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Robust analogizing and the outside view: two empirical tests of case-based decision making

Lovallo, Dan and Clarke, Carmina and Camerer, Colin F. (2012) Robust analogizing and the outside view: two empirical tests of case-based decision making. Strategic Management Journal, 33 (5). pp. 496-512. ISSN 0143-2095. doi:10.1002/smj.962. https://resolver.caltech.edu/CaltechAUTHORS:20120423-094902839

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Abstract

Executives use analogies to improve strategic decisions. However, existing research provides little guidance on the types and number of analogies that produce the best decisions. We examine models of analogy and present findings from two empirical tests. The first test, a study of private-equity investment decisions, finds that an ‘outside view’—forming a reference class of analogies—performs better than a few analogies familiar to the decision maker. The second test, a study of film revenue forecasts, compares a new model we call similarity-based forecasting (SBF) with existing methods. The study finds that SBF, which combines elements of reference class forecasting and case-based decision making, produces better forecasts than regression models. We discuss the consequences of our findings for research and practice.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1002/smj.962 DOIUNSPECIFIED
http://onlinelibrary.wiley.com/doi/10.1002/smj.962/abstractPublisherUNSPECIFIED
ORCID:
AuthorORCID
Camerer, Colin F.0000-0003-4049-1871
Additional Information:© 2012 John Wiley & Sons, Ltd. Received 25 April 2010; Final revision received 19 September 2011. Article first published online: 6 Feb. 2012. We thank Elif for her valuable research assistance.
Subject Keywords:strategic decision making; case-based decision theory; analogies; reference class forecasting; box office prediction
Issue or Number:5
DOI:10.1002/smj.962
Record Number:CaltechAUTHORS:20120423-094902839
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20120423-094902839
Official Citation:Lovallo, D., Clarke, C. and Camerer, C. (2012), Robust analogizing and the outside view: two empirical tests of case-based decision making. Strat. Mgmt. J., 33: 496–512. doi: 10.1002/smj.962
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:30252
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:23 Apr 2012 17:50
Last Modified:09 Nov 2021 19:43

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