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New product launch: herd seeking or herd preventing?

Listed author(s):
  • Ting Liu

    ()

  • Pasquale Schiraldi

    ()

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

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File URL: http://hdl.handle.net/10.1007/s00199-011-0614-x
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Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 51 (2012)
Issue (Month): 3 (November)
Pages: 627-648

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Handle: RePEc:spr:joecth:v:51:y:2012:i:3:p:627-648
DOI: 10.1007/s00199-011-0614-x
Contact details of provider: Web page: http://www.springer.com

Web page: http://saet.uiowa.edu/

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Order Information: Web: http://www.springer.com/economics/economic+theory/journal/199/PS2

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  5. repec:rje:randje:v:37:y:2006:i:4:p:910-928 is not listed on IDEAS
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  12. Carlos Oyarzun & Johannes Ruf, 2009. "Monotone imitation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(3), pages 411-441, December.
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  14. Dirk Bergemann & Juuso Valimaki, 1996. "Learning and Strategic Pricing," Cowles Foundation Discussion Papers 1113, Cowles Foundation for Research in Economics, Yale University.
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  16. Sgroi, D., 2000. "Optimizing Information in the Herd: Guinea Pigs, Profit and Welfare," Economics Papers 2000-w14, Economics Group, Nuffield College, University of Oxford.
  17. Manaswini Bhalla, 2013. "Waterfall Versus Sprinkler Product Launch Strategy: Influencing the Herd," Journal of Industrial Economics, Wiley Blackwell, vol. 61(1), pages 138-165, 03.
  18. Boğaçhan Çelen & Shachar Kariv, 2005. "An experimental test of observational learning under imperfect information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(3), pages 677-699, October.
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