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Convexity Neglect in Consumer Decision Making
Book chapter

Convexity Neglect in Consumer Decision Making

Haipeng (Allan) Chen, Alina Sorescu, Sorin Sorescu and Michael Tsiros
The Sustainable Global Marketplace, pp.286-286
Developments in Marketing Science: Proceedings of the Academy of Marketing Science, Springer International Publishing
2015
DOI: 10.1007/978-3-319-10873-5_165

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Abstract

We identify a systematic bias due to consumers’ tendency to neglect convexity when summing or averaging ratios. We demonstrate the consequences of this bias in consumers’ judgment of travel time, fuel consumption and stock evaluation. We also show that the effects are not due to motivation or calculation difficulty.

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