Analysis of judgmental forecasting behavior based on communication format of advice

Abstract

In practice, decision makers often receive advice in different formats including face-to-face (FTF) and computer-mediated (CM) advice. The present research examines how the apparent format of advice influences individual’s advice-taking behavior when making judgmental forecasting. In the controlled laboratory experiment, two treatments of participants made initial point forecast and received the same advised forecast, but using a different communication format. One treatment received face-to-face advice from a human expert. The other treatment received computer-mediated advice, but was told that the advice came from a human expert. After receiving advice, the participants revised their initial forecast to make final forecast. Our results show that advice communication format has a significant effect on participant’s utilization of advice when making final forecast. The weight on advice is significantly higher with face-to-face advice than with computer-mediated advice and credibility of advice mediates this relationship. Perceived credibility is higher for the face-to-face advice and therefore subjects rely more on the advice.