Virtual Bass Model and the left-hand data-truncation bias in diffusion of innovation studies

One of the most important applications of the Bass model is "guessing by analogy" - the parameter estimates of the Bass model for analogous products can be used to predict the diffusion pattern of a new product. However, estimates based on left-hand truncated data will be biased unless care is taken to adjust for the bias. We demonstrate the prevalence of left truncation in historical sales data and present a method for dealing with the bias by the Virtual Bass Model. We use the model to develop a database of parameter estimates that may be used in "guessing by analogy." (c) 2006 Elsevier B.V. All rights reserved.