Forecasting errors, and where to find them

My views on modelling and forecasting errors, developed through more than 50 studies and peer-reviews, to claim that there is no model under the sun that is free from errors, says Luis Willumsen

Traffic and revenue forecasting for greenfield toll roads is an ideal testing ground for modelling and forecasting. The problem is behaviourally simple: the default assumption is that the main response is route choice, and any other potential response is an upside. Nevertheless, there is abundant evidence that on average these forecasts tend to overestimate demand, sometimes by a large margin. Incidentally, the work of Bent Flyvbjerg, now at Saïd Business School, Oxford, has shown this...

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