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Showing posts with the label anchoring bias

How to avoid testing in circles.

I once had an interesting conversation with a colleague who worked in a company selling hotel room bookings. The problem was interesting. Their profits depended on many factors. Firstly, fluctuating demand e.g.: Holidays, Weekends, Local events etc. Secondly, varying types of demand e.g. Business customers, Tourists, Single night bookings or e.g.: 11 day holidays. They also had multiple types of contracts on the rooms. For some, they might have had the exclusive right to sell [as they had pre-paid], for others they had an option to sell [at a lower profit] etc. My naive view had been they priced the room bookings at a suitable mark up, upping that markup for known busy times etc. For example a tourist hotel hotel near the Olympics would be a high mark up, the tourist hotel room in winter would have incurred less of a markup. Better to get some money than none at all). He smiled and said some places do that, but he didn't. He had realised his team had a bias towards making a hea