Selling prices and profits: what survey data tell about firms' rationality

Tobias F. Rötheli
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Tobias F. Rötheli: Department of Economics, University of Bern, Bern, Switzerland, Postal: Department of Economics, University of Bern, Bern, Switzerland

Managerial and Decision Economics, 1999, vol. 20, issue 6, 319-325

Abstract: This paper states that the strong biases found in survey expectations do not necessarily distort economic decisions. An econometric analysis of price and profit data suggests that Swiss manufacturers do not base their production decisions on the forecasts they supply to the surveying institution. Instead, production decisions are based on data of past prices. This suggests that in their production management, firms make adjustments for biased marketing projections of selling prices. However, the practice of these adjustments is not optimal since it neglects the valuable information contained in these price forecasts. Copyright © 1999 John Wiley & Sons, Ltd.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:20:y:1999:i:6:p:319-325

DOI: 10.1002/(SICI)1099-1468(199909)20:6<319::AID-MDE947>3.0.CO;2-Z

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