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Agora.ForecastInUncertaintyr1.1 - 04 Dec 2019 - 13:45 - GregorioIvanoff

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"There are two ways that spreadsheets, as we know them, distort our thinking and lead to bad decisions. The first distortion is the use of point values and simple arithmetic instead of probability distributions and statistical measures. So far as I know, there's no off-the-shelf spreadsheet product - certainly none in common use - that provides for input of numbers as uncertain quantities, even though almost all of our decisions rest on forecasts or on speculations. [...]

The second distortion caused by conventional spreadsheets is more subtle. It's described in a 1980s paper, written by university researcher Jeffrey Kottemann and others concerning what they called "Performance, Beliefs, and the Illusion of Control." The paper described an experiment in which subjects were asked to perform a planning task using different tools, some of them with elaborate what-if capability and others without it.

The subjects whose tools invited them to imagine alternative scenarios believed they were doing a better job—even though statistical measures of their results showed no improvement in the actual quality of the forecasts. Those subjects did, however, take longer to perform the task. [...]"

Keywords: decision-making practices, financial objects

COFFEE, Peter. Spreadsheets: 25 Years in a Cell. Now in their 25th year, spreadsheets ignore the uncertainty of forecasts and can distort our thinking if not considered carefully, Peter Coffee writes., 2004-03-22. Available from < >. access on 18 February 2016.

-- GregorioIvanoff - 04 Dec 2019
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