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Date
2023-04-19Type
- Working Paper
ETH Bibliography
yes
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Abstract
Recency, that is, the time since an event occurred last, is commonly used to predict future events by experts. However, relying solely on recency and thereby ignoring frequency and other information is commonly regarded as a fallacy. We develop four conditions under which recency alone can predict future events at least as well as integrating all available information. In an extensive empirical study on predicting customer choice in 27 retail businesses and 31 further prediction problems including banking, crime, sports, and others, we analyze these conditions and show that they are central to the performance of the recency-based hiatus heuristic as compared with standard prediction models. We conclude that relying on recency can be ecologically rational. Show more
Publication status
publishedExternal links
Journal / series
SSRNPages / Article No.
Publisher
Social Science Research NetworkSubject
Bounded rationality; Ecological rationality; Heuristics; Prediction; RecencyOrganisational unit
03995 - von Wangenheim, Florian / von Wangenheim, Florian
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ETH Bibliography
yes
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