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Information Provision and Consumer Search

Author

Listed:
  • Jay Lu

    (Cornell University)

  • Simon Board

    (University of California - Los Angeles)

Abstract

Buyers often search across multiple retailers or websites to learn which product best fits their needs. We study how sellers manage these search incentives through their disclosure policies (e.g. advertisements, product trials and reviews), and ask whether competition leads sellers to provide more information. We first show that if sellers can track buyers (e.g. they can observe buyers' search history via their cookies), then in a broad range of environments, there is a unique equilibrium in which all sellers provide the 'monopoly level' of information. However, if buyers are anonymous and the search cost is small, then all sellers provide full information about their products. Tracking software thus enables sellers to implicitly collude, providing a motivation for regulation.

Suggested Citation

  • Jay Lu & Simon Board, 2015. "Information Provision and Consumer Search," 2015 Meeting Papers 1427, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:1427
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    References listed on IDEAS

    as
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    Cited by:

    1. Strulik, Holger, 2019. "I shouldn’t eat this donut: Self-control, body weight, and health in a life cycle model," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).

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