Consumer Search and Choice Overload
In this paper, we develop a model of within-firm sequential, directed search and study a firm’s ability and incentive to steer consumers. The paper’s main insight is that the firm often benefits from garbling the information it provides to consumers. This induces consumers to keep searching but discourages some of them from visiting the firm—-a form of garbling overload. The incentive to garble the information arises even though the firm and the consumers have in common the interest of maximizing the probability of trade—-in particular, the setting abstracts from any self-preferencing or bias in favor of particular products. Because of information garbling, an increase in the size of the product line further discourages consumers from visiting the firm—-consistent with choice overload.
Date: 28 October 2022, 14:00 (Friday, 3rd week, Michaelmas 2022)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room G
Speaker: Volker Nocke (University of Mannheim)
Organising department: Department of Economics
Part of: Nuffield Economic Theory Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Clark