 Consumer search with blind buyingYanbin Chen, Sanxi Li, Kai Lin and Jun Yu Games and Economic Behavior, 2021, vol. 126, issue C, 402-427 Abstract: This article studies a sequential search model in which consumers can purchase a product without incurring a search cost to inspect the match value, which we call “blind buying”. We show that the optimal search policy is no longer as per Weitzman (1979). When the match value has a symmetric distribution, both consumers and firms are indifferent to the search order, conditional on that blind buying does not take place in the first stage. Blind buying always increases total welfare, and increases market prices and industrial profits if and only if the first-sample search cost is below a threshold value. An increase in the search cost reduces equilibrium prices. Such a result is consistent with existing price-directed search models, but the underlying mechanisms are different. We also show that being prominent can adversely affect a firm if the match value is asymmetrically distributed, which contrasts the literature. Keywords: Consumer search; Blind buying; Observable price; Search cost; Prominence (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:126:y:2021:i:c:p:402-427 DOI: 10.1016/j.geb.2021.01.009 Access Statistics for this article Games and Economic Behavior is currently edited by E. Kalai More articles in Games and Economic Behavior from Elsevier |
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