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Consumer's Curse? Dynamics of Forecasting Errors Around Consumption Decisions
Third-party funded project
Project title Consumer's Curse? Dynamics of Forecasting Errors Around Consumption Decisions
Principal Investigator(s) Odermatt, Reto
Organisation / Research unit Departement Wirtschaftswissenschaften / Politische ÷konomie (Stutzer)
Project start 01.02.2019
Probable end 31.12.2019
Status Completed
Abstract

With the proposed research project, I strive to broaden our knowledge on the dynamics of people's accuracy in predicting the well-being consequences of their consumption decisions. Studying the accuracy of people's predictions at different points in time around the consumer experience provides a novel contribution to the literature and enhances our understanding of forecasting errors. The project advances the current state of the literature in several directions. First, capturing the actual change as well as the predicted change in consumer well-being will not provide a static but a dynamic perspective on forecasting errors. Second, we will study the extent to which people with different value orientations are differently prone to overestimate the emotional benefits of consuming materialistic goods. Specifically, we will assess whether the misprediction is systematically larger for materialistically oriented individuals. Third, we will also consider the relevance of social status concerns in consumer decisions for the forecasting errors. The potential insights of this project have crucial implications for the assumption of consumer sovereignty, a cornerstone in economics in general, and of consumer theory in particular. Informing consumers about biases in their expectations could foster their well-being by helping them to make better decisions.

Financed by University of Basel
   

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28/05/2024