Should you assume a product is better because it keeps selling out?
Scarcity creates signals, but signals are not explanations.
A product that constantly sells out attracts attention because availability itself becomes information.
The hidden mechanism is signal amplification. Once customers notice recurring shortages, they often begin interpreting those shortages as evidence of value.
Imagine two products. One sells out because it is exceptional. Another sells out because the business consistently underestimates demand. From a customer's perspective, both shortages look similar.
A second-order effect appears when scarcity attracts additional buyers. Demand rises partly because people observe scarcity, making future shortages even more likely.
People often think stockouts reveal quality. Stockouts more reliably reveal an imbalance between supply and demand.
