Projection Bias in Catalog Orders
Ted O'Donoghue, and
Timothy J. Vogelsang. 2007. "Projection Bias in Catalog Orders."
American Economic Review,
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)
Article Full-Text Access
Vogelsang, Timothy J.