Understanding and neutralizing the expense prediction bias: the role of accessibility, typicality, and skewness

Ray Charles "Chuck" Howard*, David J. Hardisty, Abigail B. Sussman, Marcel Lukas

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    6 Citations (Scopus)
    14 Downloads (Pure)

    Abstract

    Consumers display an expense prediction bias in which they underpredict their future spending. The authors propose this bias occurs in large part because: 1) consumers base their predictions on typical expenses that come to mind easily during prediction, 2) taken together, typical expenses lead to a prediction near the mode of a consumer’s expense distribution rather than the mean, and 3) expenses display positive skew (with mode < mean). Accordingly, the authors also propose that prompting consumers to consider reasons why their expenses might be different than usual increases predictions – and therefore prediction accuracy – by bringing atypical expenses to mind. Ten studies (N = 6,044) provide support for this account of the bias and the “atypical intervention” developed to neutralize it.
    Original languageEnglish
    Pages (from-to)435-452
    Number of pages18
    JournalJournal of Marketing Research
    Volume59
    Issue number2
    Early online date15 Feb 2022
    DOIs
    Publication statusPublished - 1 Apr 2022

    Keywords

    • Expense prediction bias
    • Consumer financial decision making
    • Budgeting
    • Accessibility
    • Typicality
    • Skewness

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