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.”