Price biases (managers)

Question 1

Conformity bias

Answer 1

Tendency to conform to the actions and opinions of the majority. The tendency to accept a wrong opinion rises with the nr of opponents

Question 2

Competition neglect

Answer 2

Overconfidence leads managers to neglect competition. Induces managers to take on large risks based on the assumption that they can beat the odds

Question 3

Competitor obsession

Answer 3

Tendency to pursue competitor-oriented goals to the detriment of own profitability.
Leads to lower prices and profits

Question 4

Simple heuristics

Answer 4

Tools built to find simple solutions to complex problems

Question 5

Underpricing for new product introductions

Answer 5

Managers tend to underprice new products. Prices should be set higher than the intuition