Trends and forecasting

Question 1

What is the problem with logical positivism in regards to prediction a.t. Aligica?
2003

Answer 1

That positivism seeks to explain, not predict, but by tying them too close together the legitimacy of the methods derived from the two is undermined.

Question 2

What is the aim of the Aligica text?

Answer 2

To help create a firm epistemological ground for Futures Studies

Question 3

What is the difference between an explanation and a prediction?

Answer 3

If the argument precedes P, then we have a prediction; if it succeeds P, we have an explanation.
Explaining P is simply “predicting” P after it has already happened, and predicting P is simply “explaining” P before it has already happened.

The Hempel Model / covering law

Question 4

What does the Hempel model / covering law explain?

Answer 4

The symmetry between explanations and predictions

Question 5

What is the main critique of the Hempel model?

Answer 5

That there exists explanations that lack “predictive power”, and that a more thorough study of the relationship would have shown it to be more complex

Question 6

What affects predictions despite the past a.t. Aligica?

Answer 6

Background information - e.g bus ticket prices.

Local knowledge and tacit knowledge is therefore important

Question 7

What is a retrodiction?

Answer 7

Establishing something based on a known general law (?)

Question 8

What is the main point of Wolfers and Zitzewitz? 2004

Answer 8

They show that market-generated forecasts are typically fairly accurate, and that they outperform most moderately sophisticated benchmarks.
Calls these prediction markets

Question 9

What is prediction markets?

Answer 9

Markets where participants trade in contracts whose payoff depends on unknown future events.
If it is efficient, the market price will be the best predictor of an event

Question 10

What is the assumption behind a prediction market?

Answer 10

That the market is motivated by rational traders

Question 11

Which three types of prediction markets does Wolfers and Zitzewitz talk about?

Answer 11

Winner takes all
Index
Spread

Question 12

How should one assess the accuracy of prediction markets?

Answer 12

By comparing them to individual analysts - not poll-based forecasting

Question 13

What kind of events is the prediction market best to predict?

Answer 13

Middle-probability, since psycological studies suggest that people tend to overvalue small prob events and undervalue near certainties

Question 14

What behavioral bias are there at a prediction market?

Answer 14

People over- and undervalue, and they trade according to their desires rather than objective probability assessments

Question 15

What was the DARPA market?

Answer 15

The prediction market put up by the US Defense Ministry in 2003.

Question 16

Pros and cons for DARPA?

Answer 16

Created fear that terrorists would profit from kidnappings and acts of terror. On the other hand some argued that the terrorists would then reveal their intentions in how they traded.

Question 17

When will a prediction market work most effectively?

Answer 17

When the subject is discussed and has a high entertainment value.
There is not sufficient data to say whether it makes a difference to use real money or not.

Question 18

What is prediction?

Answer 18

It is about foretelling something, it deals with indicating what the future will be (which scenario forecasting does not)
They can be both categorial (this happens) and conditional (it happens if that happens).

Question 19

Can predictions be falsified or verified?

Answer 19

Temporally universal theses can never be decisively verified, whereas temporally particularized theses can never be falsified

Question 20

What does it mean to ascribe a probability to a future event?

Answer 20

It does not answer a predictive question but instead characterizes the status of such a prediction

Question 21

What is a forecast?

Answer 21

It is a definite prediction concerned with specific and concrete events

Question 22

What is a pseudoprediction?

Answer 22

A prediction that is empty of any descriptive bearing, saying something we already know. E.g. It will be Christmas again next year

Question 23

What is a metaprediction?

Answer 23

A prediction about a prediction e.g. whether a prediction is correct

Question 24

What does Rescher mean when he talk about a feedback phenomena on predictions?

Answer 24

Predicting something can influence people to do or not do something, e.g. traffic jams

Question 25

Which three preconditions does Rescher put up for rational predictions?

Answer 25

Data availability, pattern discernability and pattern stability

Question 26

What is the Delphi method?

Answer 26

It is a way of aggregating expert predictions, while avoiding that they influence each other. It is a judgmental method (as opposed to formal)

Question 27

What have the delphi method been criticized for?

Answer 27

That experts are afraid of ruining their reputation, hence they answer conventionally, which then creates a 'false' consensus. It further assumes that there is only one future and the problem is to identify it

Question 28

Which formal methods does Rescher talk about?

Answer 28

1. Trend projection: linear extrapolation (unrealistic) 2. Curve fitting: extrapolation does not need to be linear (is about finding a function 'close to') 3. Cyclical analysis: problem to say where we are on the cycle 4. Circumstancial analogy: often used when placing something in a statistical reference group. E.g. giving that behavior and health he most likely will die before 70

Question 29

What can indicators be used for?

Answer 29

If you have two factors that are closely linked, a predictive indicator presupposes the operation of causal linkages

Question 30

What is scientific prediction?

Answer 30

Law-based: Our most sophisticated predictive method is that of inference from formalized laws

Question 31

What is the problem of choosing a predictive method a.t. Rescher?

Answer 31

Justifying the employment of a specific predictive method will always itself involve the familiar inductive move from a past pattern to a future expectation

Question 32

Is it difficult to predict human actions?

Answer 32

To some extent yes, since they have freedom of choice. On the other hand they are controlled by their own preferences, which can to some degree be predicted

Question 33

What does the stock market predict a.t. Rescher?

Answer 33

The present economic attitudes rather than the future economic reality

Question 34

Do other social sciences predict?

Answer 34

Yes, however difficult to predict in sociology as it is about changes in patterns and difficult in political science as well (e.g. elections). Demographic prediction is very developed.

Question 35

Can history predict a.t. Rescher?

Answer 35

Not really, since e.g. small interactions have no implications in the short run but do in the long run. However history provides us with an understanding of possible outcomes, and places us in a better position to act with intelligence

Question 36

What is the punctuated chaos doctrine?

Answer 36

That there is period of local stability in history where it is possible to predict

Question 37

What is a usual regression mistake?

Answer 37

To assume that if something extreme happens, it will happen again (e.g. on the stock market) Furthermore when one talks about regression towards the mean, it is a problem that we don't know what the mean is or if it changes

Question 38

What is required to make the substantial jump from probability to prediction?

Answer 38

Contextual knowledge, personal expertise etc. Not enough with statistics

Question 39

Which prediction method is people more likely to trust?

Answer 39

Formal methods (regressions, rather than words)