Effects of behavioral bias regarding demand forecasting in a competitive market
Juan Li,
Xuan Zhao,
Yini Zheng
Abstract:Considerable human judgment is involved in demand forecasting. When managers judge demands under uncertainty, they inevitably use signals to update their demand information. These signals are seldom perfect; hence, managers hold behavioral bias about the signal fidelity, that is, over‐ or under‐estimating the signal fidelity. This article models managers' behavioral bias about signal fidelity in Bayesian demand forecasting and explores its impact on competitive firms. We find that no matter whether the competi… Show more
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