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Consumer search, steering and choice overload

Author

Listed:
  • Volker Nocke

    (University of Mannheim = Universität Mannheim)

  • Patrick Rey

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We develop a model of within-firm sequential, directed search and study a firm's ability and incentive to steer consumers. We find that the firm often ben- efits from adopting a noisy positioning strategy, which limits the information available to consumers. This induces consumers to keep searching but discour- ages some of them from visiting the firm. This occurs even though the firm and the consumers have in common the interest of maximizing the probability of trade. Because of such noisy positioning, an increase in the size of the product line further discourages consumers from visiting the firm—consistent with choice overload.

Suggested Citation

  • Volker Nocke & Patrick Rey, 2024. "Consumer search, steering and choice overload," Post-Print hal-04867198, HAL.
    • Handle: RePEc:hal:journl:hal-04867198
    DOI: 10.1086/728108
    Note: View the original document on HAL open archive server: https://hal.science/hal-04867198v1
    as

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