Which Dreams Come True? Endogeneity, Industry Structure and Forecasting Accuracy

Forecasts are plentiful. Accurate long-range forecasts are rare. But some forecasts are more accurate than others are and a few are very accurate. In this paper, we first explore the case of Moore's Law, a forecast that has proven quite accurate for almost 40 years. We illustrate how expectations that Moore's Law will continue to be accurate actually make it accurate. Based on the insights of this case, we hypothesize that two factors facilitate such self-fulfilling forecasts and so make accuracy more possible. We test these hypotheses on a set of 3142 forecasts about US manufacturing industries during the 1970s. We find that high industry concentration and high control over the predicted variable tend to increase the accuracy of forecasts. Copyright 2003, Oxford University Press.

[1]  Peter J. Rousseeuw,et al.  Robust regression and outlier detection , 1987 .

[2]  S. Winter,et al.  An evolutionary theory of economic change , 1983 .

[3]  William H. Starbuck,et al.  Innocents in the Forest: Forecasting and Research Methods , 1990 .

[4]  K. Eisenhardt,et al.  Time pacing: competing in markets that won't stand still. , 1998, Harvard business review.

[5]  R. Schaller,et al.  Moore's law: past, present and future , 1997 .

[6]  Alfred E. Brenner,et al.  Moore's Law , 1997, Science.

[7]  M. Lounsbury,et al.  Ending the Family Quarrel , 1997 .

[8]  Ian H Maitland.  The Limits of Business Self-Regulation , 1985 .

[9]  C. F. Phillips.  Industrial Market Structure and Economic Performance , 1971 .

[10]  R. L. Winkler,et al.  Averages of Forecasts: Some Empirical Results , 1983 .

[11]  Barr Rosenberg,et al.  Error Rates in CRSP and Compustat Data Bases and their Implications , 1974 .

[12]  Gordon Bell,et al.  How things really work (videotape): two inventors on innovation , 1992 .

[13]  Eli Maor,et al.  To Infinity and Beyond , 1986 .

[14]  James G. March.  A Scholar's Quest , 2003 .

[15]  E. Johnsen.  Richard M. Cyert & James G. March, A Behavioral Theory of The Firm, Prentice-Hall, Inc., Englewood Cliffs, New Jersey, 1963, 332 s. , 1964 .

[16]  M. Shubik,et al.  A Behavioral Theory of the Firm. , 1964 .

[17]  Robert J. Genetski,et al.  Long-Range Forecasting: From Crystal Ball to Computer , 1981 .

[18]  Ronald N. Kostoff,et al.  Science and technology roadmaps , 2001, IEEE Trans. Engineering Management.

[19]  P. Ingram,et al.  The New Institutionalism in Strategic Management , 2002 .

[20]  S. Winter,et al.  An Evolutionary Theory of Economic Change.by Richard R. Nelson; Sidney G. Winter , 1987 .

[21]  R. Posner.  Oligopoly and the Antitrust Laws: A Suggested Approach , 1969 .

[22]  Tim Jackson,et al.  Inside Intel: Andy Grove and the Rise of the World's Most Powerful Chip Company , 1997 .

[23]  Burton S. Kaliski,et al.  Moore's Law , 2005, Encyclopedia of Cryptography and Security.

[24]  C. Mead,et al.  Fundamental limitations in microelectronics—I. MOS technology , 1972 .

[25]  G.E. Moore,et al.  Cramming More Components Onto Integrated Circuits , 1998, Proceedings of the IEEE.

[26]  D. A. Thompson,et al.  The Future of Magnetic Data Storage Technology , 2000 .

[27]  Anil K. Gupta,et al.  Industry Self-Regulation: An Economic, Organizational, and Political Analysis , 1983 .

[28]  Howard E. Aldrich,et al.  Organizing Business Interests: Patterns of Trade Association Foundings, Transformations, and Deaths , 1988 .