The Effect Of Frame And Series Trend On Trend Damping

Individuals always make forecasting in two ways: statistic forecasting and judgmental forecasting. Because of subjectivity, judgmental forecasting may result in biases; trend damping is just the common one. Trend damping refers to that individuals tend to underestimate future values for upward trend, and overestimate them for downward ones when forecasting from time-series with noise. In other words, people underestimate the steepness of the series’ trends. Previous researches found that damping effect was bigger when forecast for upward trend than downward trend, but participants always make forecasting for series, such as the sales of a good which is the more the better. Participant may regarded the upward trend as gain, and regarded the downward trend as loss. Which means that previous results may mixed the effect of frame on trend damping, and researches showed that frame may affect trend damping.Based on the shortcoming in previous studies, present research aimed to investigate the effect of frame and trend on trend damping through two experiments. Experiment 1 explored the effect of frame and trend on trend damping in controllable event. Previous researches suggested that the effect of frame and series trend on trend damping may result from optimistic bias and expectation reverse. To investigate which could better explain the effect of frame and series trend on trend damping, Experiment 2 explored the effect of frame and trend on trend damping in uncontrollable event. If the results of experiment 2 were same as experiment 1, then optimistic bias may be the better account, whereas expectation reverse was the better account.Results showed that:(1) The damping effect was greater when the slope of time series was bigger;(2) The interaction effect of gain-loss frame and series trend was significant under controllable situation. Damping effect is greater in downward trend than in upward one in the frame of gain, but is no difference in the frame of loss.(3) The interaction effect of gain-loss frame and series trend was also significant under the uncontrollable situation. Optimistic bias may be the better account of the effect of frame and trend on trend damping.