Premium
Selling prices and profits: what survey data tell about firms’ rationality
Author(s) -
Rötheli Tobias F.
Publication year - 1999
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/(sici)1099-1468(199909)20:6<319::aid-mde947>3.0.co;2-z
Subject(s) - economics , production (economics) , rationality , profit (economics) , survey data collection , microeconomics , statistics , mathematics , political science , law
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.