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Quantity, reference, and salience biases in inventory estimation (RV of 2003/32/MKT)

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Many purchase and consumption decisions require that consumers estimate the quantity of a product that they have in inventory. Despite the frequency of such estimates, the authors do not know whether they are accurate or whether they are systematically biased by the quantity, reference level, or perceptual salience of the product in inventory. In addition, they do not know if biases in inventory estimations influence consumption decisions. They examine these issues by developing a model of inventory estimation and by testing it in two lab studies and four field studies. Across a variety of products and contexts, they find that inventory estimates consistently exhibit an asymmetric contraction bias, where consumers slightly overestimate low levels of inventory and strongly underestimate high levels of inventory. They also find that these biases are particularly strong when products are not salient in the pantry and that they can inflate consumption. Finally, they show that these results can account for known biases and seemingly inconclusive findings in other estimation tasks.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2004/2004-45.pdf

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Copyright INSEAD. All rights reserved