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Information Provision in a Sequential Search Setting

Artem Hulko and Mark Whitmeyer

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Abstract: Consider a variation on the classic Weitzman search problem, in which competing firms can choose how much information about their product to reveal to a consumer. If there are no search frictions, there is a unique symmetric equilibrium in pure strategies; and for any market of finite size, the firms are not fully informative. With search frictions, if the expected value of the prize is sufficiently high, there is a unique symmetric equilibrium in which firms are fully informative. Remarkably, a small search cost leads to the perfect competition level of information provision: consumers gain when firms are forced to compete on information.

New Economics Papers: this item is included in nep-gth and nep-mic
Date: 2018-02, Revised 2018-06
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