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New product launch: herd seeking or herd preventing?

Author

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  • Ting Liu

    ()

  • Pasquale Schiraldi

    ()

Abstract

A decision maker offers a new product to a number of potential adopers. He does not know the value of the product, but adopers receive some private information about it. We study how the decision maker may influence learning among adopers by manipulaing the launch sequence when both the decision maker and adopers can learn about the value of the product from previous adoption decisions. The conditions under which the decision maker prefers a sequential launch to a simultaneous launch depend on adopers’ prior beliefs about the value of the product and adoption costs. We derive the decision maker’s optimal launch sequence and study how it endogenizes informational herding. Copyright Springer-Verlag 2012

Suggested Citation

  • Ting Liu & Pasquale Schiraldi, 2012. "New product launch: herd seeking or herd preventing?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(3), pages 627-648, November.
  • Handle: RePEc:spr:joecth:v:51:y:2012:i:3:p:627-648
    DOI: 10.1007/s00199-011-0614-x
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Nicolás Figueroa & Carla Guadalupi, 2017. "Convincing early adopters: Price signals and Information transmission," Documentos de Trabajo 486, Instituto de Economia. Pontificia Universidad Católica de Chile..
    2. Pier-André Bouchard St-Amant, 2012. "Getting the Right Spin: A Theory of Value of Social Networks," Working Papers 1293, Queen's University, Department of Economics.
    3. Liu, Ting & Schiraldi, Pasquale, 2014. "Buying frenzies in durable-goods markets," European Economic Review, Elsevier, vol. 70(C), pages 1-16.
    4. Alexei Parakhonyak & Nick Vikander, 2013. "Optimal Sales Schemes for Network Goods," Discussion Papers 13-11, University of Copenhagen. Department of Economics.
    5. Ludmila Matyskova & Jan Sipek, 2017. "Manipulation of Cursed Beliefs in Online Reviews," CERGE-EI Working Papers wp586, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    6. Pier-Andre Bouchard St-Amant, 2013. "Externalities, Social Value and Word of Mouth: Notions of Public Economics on Networks," Working Papers 1301, Queen's University, Department of Economics.

    More about this item

    Keywords

    Herding; Product launch sequence; Social learning; D8;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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