Probabilities, Odds, and Forecasts of Rare Events

Abstract

Abstract Several issues related to the mode of expression of forecasts of rare events (RSEs) are addressed in this paper. These issues include the correspondence between forecasters' judgments and their forecasts, the problem of overforecasting, and the use of forecasts as a basis for rational decision making. Neither forecasters nor users are well served by current practices, according to which operational forecasts of RSEs are generally expressed in a categorical format. It is argued here that sound scientific and economic reasons exist for expressing forecasts of RSEs in terms of probabilities. Although quantification of uncertainty in forecasts of RSEs–-and the communication of such information to users–-presents some special problems, evidence accumulated from a multitude of operational and experimental probabilistic weather forecasting programs suggests that these problems involve no insurmountable difficulties. Moreover, when a probabilistic format is employed, forecasts of RSEs can correspond to f...