A consumer feels unwell and decides to buy some medicine to treat the illness. The local drug store offers a choice of Western or alternative remedies (such as TCM – traditional Chinese medicine), but the consumer’s choice may depend less on the stated effects of the medicine than his or her beliefs about the illness and goals in treating it. TCM and other ... Read More

Anchoring bias happens when people overemphasize a starting point when they make predictions or decisions. In the case of analysts, Ling Cen, Gilles Hilary and K.C. John Wei show that their forecast earnings per share (FEPS) are influenced by the industry median, which in turn leads them to underestimate future profitability for firms with abnormally high ... Read More