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Gleaning inferences from soldout products

Xin Ge, Paul R. Messinger and Yuanfang Lin

Journal of Retailing and Consumer Services, 2019, vol. 49, issue C, 173-185

Abstract: We show that consumers draw positive inferences about the desirability of a product when similar products are observed to sell out. We refer to this inference as a “cohort-signal†effect. Such inferences are predicted by a utility-theoretic social-Bayesian inference model, and model predictions are tested in two experiments. The model starts from the critical “social†assumption that consumers new to a product recognize that their preferences may be similar to those of the cohort that have revealed their preferences through actual purchase behavior. This blend of analytical modeling and behavioral verification reveals that one form of preference construction can arise from rational thinking on the part of consumers—not as an anomaly that calls into question standard utility theory.

Date: 2019
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Handle: RePEc:eee:joreco:v:49:y:2019:i:c:p:173-185