Q2. What future works have the authors mentioned in the paper "Decision fatigue and heuristic analyst forecasts∗" ?
Their archival data test design helps address the potential irreproducibility problems that plague laboratory experiments that are most commonly employed to study ego depletion. The authors can rule out several alternative explanations. Their study motivates several directions for future research. Future research should explore how decision fatigue influences other agents in the financial system ( e. g., retail investors, professional money managers, financial advisors, rating agencies, and market makers ) and outside the financial system, especially in professions where mistakes can be very costly ( e. g., surgeons, air traffic controllers ).
Q3. What does Vohs et al. (2008) find about decision fatigue?
In four laboratory studies, Vohs et al. (2008) find that participants who made choices among consumer goods or college course options suffered from reduced self-control (i.e., less physical stamina, reduced persistence in the face of failure, more procrastination, and lower quality and quantity of arithmetic calculations).
Q4. What do the authors find that analysts become more heuristic in their forecasting strategies?
The authors also find that analysts become more heuristic in their forecasting strategies as they become more decision-fatigued; they are more likely to herd toward the consensus forecast, to self-herd by reissuing their own previous outstanding forecast, and to issue a forecast that is rounded to end with a 0 or 5.
Q5. How can the authors mitigate firm characteristic effects on forecast accuracy?
By using a measure of relative forecast accuracy, the authors can mitigate firm characteristic effects on forecast accuracy to isolate decision fatigue effects more successfully.
Q6. What factors influence the accuracy of forecasts?
Clement (1999) shows that factors such as analysts’ ability, available resources, and portfolio complexity significantly influence forecast accuracy.
Q7. What is the effect of the number of forecasts an analyst has issued earlier in the day?
the authors use the number of forecasts an analyst has issued earlier in the same day as a proxy for decision fatigue, and the authors find that analysts become less accurate as they become more decision-fatigued.
Q8. How does the average accuracy of the first forecast change?
The average accuracy decreases from the first forecast to the second forecast by 0.089, which is equivalent to a decrease of 18.5%.
Q9. What does the author expect analysts to do when they become mentally fatigued?
The authors also predict that when analysts become mentally fatigued, they will exhibit a reduced ability to issue an accurate forecast and are more likely to use heuristics (System 1 thinking) when issuing a forecast.
Q10. What is the reason for the decline in performance after a session of decision-making?
A further question that arises in the literature is whether the observed decline in performance after a session of decision-making (decision fatigue) stems from the exhaustion ofthe limited resource or from a need to preserve the remaining stock of the resource.
Q11. What is the main reason why analysts are subject to decision fatigue?
When the senior analyst is fatigued and unable to invest the necessary mental resources to reviewing the work done by the team, the senior analyst might resort to more heuristic behavior.
Q12. What is the effect of decision fatigue on analyst forecasts?
There is also greater self-herding, which means that the forecasts are also more likely to be reissuances of the analyst’s own previous forecast of a firm.