American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Projection Bias in Catalog Orders
American Economic Review
vol. 97,
no. 4, September 2007
(pp. 1217–1249)
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)Citation
Conlin, Michael, Ted O'Donoghue, and Timothy J. Vogelsang. 2007. "Projection Bias in Catalog Orders." American Economic Review, 97 (4): 1217–1249. DOI: 10.1257/aer.97.4.1217Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- L81 Retail and Wholesale Trade; e-Commerce