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Projection Bias in Catalog Orders

Projection Bias in Catalog Orders Abstract Evidence suggests that people understand qualitatively how tastes change over time, but underestimate the magnitudes. This evidence is limited, however, to laboratory evidence or surveys of reported happiness. We test for such projection bias in field data. Using data on catalog orders of cold-weather items, we find evidence of projection bias over the weather—specifically, people's decisions are overinfluenced by the current weather. Our estimates suggest that if the order-date temperature declines by 30°F, the return probability increases by 3.95 percent. We also estimate a structural model to measure the magnitude of the bias. (JEL D12, L81 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Projection Bias in Catalog Orders

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References (30)

Publisher
American Economic Association
Copyright
Copyright © 2007 by the American Economic Association
Subject
Articles
ISSN
0002-8282
DOI
10.1257/aer.97.4.1217
Publisher site
See Article on Publisher Site

Abstract

Abstract Evidence suggests that people understand qualitatively how tastes change over time, but underestimate the magnitudes. This evidence is limited, however, to laboratory evidence or surveys of reported happiness. We test for such projection bias in field data. Using data on catalog orders of cold-weather items, we find evidence of projection bias over the weather—specifically, people's decisions are overinfluenced by the current weather. Our estimates suggest that if the order-date temperature declines by 30°F, the return probability increases by 3.95 percent. We also estimate a structural model to measure the magnitude of the bias. (JEL D12, L81 )

Journal

American Economic Review – American Economic Association

Published: Sep 1, 2007

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