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Why do we think our current preferences will remain the same in the future?
in Data Science & Statistics by Platinum (124,320 points) | 184 views

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The projection bias is the tendency to project current preferences into the future as if future tastes will match current ones (Loewenstein, O’Donoghue, and Rabin 2003).

One example that we have all encountered is when grocery shopping on an empty stomach we buy more food than we need, and buy types of food that we had not planned to buy- such as junk food (Wilkinson and Klaes 2012; Tal and Wansink 2013). We incorrectly anticipate our future hunger preferences based on the preferences we held while making purchase decisions.

In the Northern Hemisphere, sales of convertibles rise in April in anticipation of sunnier summer months, as a rational economics model would predict, but sales also increase during abnormally sunny weeks in winter months and decline when the clouds return (Busse et al. 2015). Similarly, snowstorms increase the purchases of four-wheel drive cars. The projection bias explains this tendency to make buying decisions while assuming the future will be similar to the present.

Projection bias suggests that current cold weather would increase the desirability of cold-weather clothing. One study found such an effect; data from a catalog of cold-weather items showed that customers were 3.95% more likely to return a purchase for each 30°F decrease in temperature (Conlin, O’Donoghue, and Vogelsang 2007).

We also fail to recognise the power of habit formation- whereby we increasingly make the same decision. This can lead to a bias in future-planning decisions like retirement savings (Loewenstein, O’Donoghue, and Rabin 2003).

Succumbing to addiction is often the result of a failure to correctly estimate the duration of a craving. If a person suffering from addiction can accept that these current feelings will pass in the future, they may be able to resist the cravings (Larimer, Palmer, and Marlatt 1999).  We do this for all types of temptations, and tend to overestimate our ability to resist them. This leads us to expose ourselves to high-temptation situations (Nordgren, Harreveld, and Pligt 2009).

https://www.experimentengine.com/blog/2015/10/28/avoid-projection-bias/

https://www.behavioraleconomics.com/mini-encyclopedia-of-be/projection-bias/

 

by Platinum (124,320 points)
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