Consumer Cognitive Bias And Product Quality ——Based On Ciri Crash Tests Analysis

In social psychology and behavioral industrial organization theory,overconfidence and above average effect are the focus of economists.The explanation of overconfidence was first mentioned in Adam Smith’s The Wealth of Nations.The understanding of overconfidence and the analysis of its impact are very important in many fields,which is the main research content in behavioral industry organization theory.At present,in the theory of industrial organization,the research on the problem of unobservable product quality and consumer decision is mainly based on the premise of rational consumers,and the irrational behavior of consumers is seldom considered.In behavioral economics,the research on consumer behavior and consumer decision is mainly analyzed from the perspective of consumers’ lack of product cognition and cognitive deviation of their own ability,and there is almost no research on consumers’ cognitive deviation of product quality.Therefore,this paper takes China’s automobile market as an example to study the impact of consumers’ cognitive bias on product quality on consumers’ decisionmaking based on the existing research of industrial organization theory and behavioral economics.First of all,the utility obtained by consumers due to automobile safety is deduced by von Neuman-Morgenstern utility function.Then,three types of consumers are defined according to the form of utility function--rational consumers,over-confident consumers and over-pessimistic consumers.Secondly,according to the demand estimation model,the empirical model of the relationship between the market share of each model and the vehicle crash test is deduced.Finding an estimate of the dynamic processing effect in the DID can test whether the consumer is a rational consumer.Finally,the sales data of CAAM from January2018 to December 2020 and the crash test results of C-IASI are used to estimate the above dual difference model.The results show that :（1）when the vehicle crash test results are excellent,the market share of each vehicle model does not change significantly;When the car crash test results are not good,the market share of each model will significantly decline.Therefore,consumers overestimate the safety of automobiles,so when the performance of automobile crash test is not excellent,it is lower than consumers’ expectation of automobile safety,so the market share of automobiles will decrease significantly.（2）When the car crash test results are not excellent,the market share of other models of the same brand does not decline significantly,that is to say,the impact of the car crash test of China Insurance Research Institute only has a significant impact on the model under test,and the impact on other models of the same brand as the model under test is not significant.