FORECAST SUFFICIENCY CHARACTERISTIC - CONSTRUCTION AND APPLICATION

The binary relation of sufficiency induces a quasi order among alternative forecast systems, consistent with their order in terms of economic values, yet independent of the prior distribution and the loss function. This invariance across decision problems makes the sufficiency relation an attractive tool for comparing forecasts serving multiple users. The existence of the sufficiency relation between discrete probabilistic forecasts of binary events may be verified graphically by plotting Forecast Sufficiency Characteristics (FSC). The article presents a general algorithm for constructing FSC and illustrates the concept with an application to real meteorologic forecasts. © 1991.