THE SUBOPTIMAL FUTURE OUTCOME OF CONSUMER DECISIONS: A SURVEY ON PROJECTION BIAS

Kármen Kovács

Studies in Business and Economics, 2023, vol. 18, issue 2, 196-216

Abstract: The purpose of this paper is to study projection bias when individuals decide on their future consumption. The present research aims to investigate what and how factors influence the misprediction of future preferences and tastes, resulting in a gap between the expected and realised consumer utility. An online survey was conducted in Hungary to explore how personal drivers and beliefs influence the outcome of purchasing decisions on future consumption and how they contribute to a consumer utility gap. The research results demonstrate that high-level naivety goes with a minor change of preferences and tastes between the dates of purchasing choice and consumption, resulting in a small utility gap. Furthermore, individuals with stronger financial self-control perceive their savings to be higher and their utility gap to be smaller. We show that financial self-control, the change of preferences and tastes and the education level are significant predictors of the consumer utility gap regarding projection bias.

Keywords: projection bias; misprediction; intertemporal choice; preference change; consumer utility (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:blg:journl:v:18:y:2023:i:2:p:196-216

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