Intuition and Professional Competence: Intuitive Versus Rational Forecasting of the Stock Market

  • Harteis C
  • Gruber H
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Abstract

Abstract This article argues that intuition is a crucial component of professional competence, and provides empirical evidence to support
this claim. It was found that in most cases intuitive predictions of stock market development are better than rationally justified
ones and that experts predict more precisely than novices on a descriptive data level. The discussion links these findings
to the literature about expertise and intuition. Research on professional expertise theoretically indicates intuition as a
crucial component of that expertise. This article focuses on the exercise of intuition in the domain of investment. Stock
market investment decisions rely on forecasts of market development. As complete information is not available, entirely rational
decisions cannot be made, and it becomes necessary to rely on intuition. An overview of theories on intuition are presented
followed by discussion of an empirical study in which 32 persons of varying experience in the stock market used intuition
as well as rational justifications to predict stock rates.

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Authors

  • Christian Harteis

  • Hans Gruber

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