Consumer Search, Steering and Choice Overload

Volker Nocke and Patrick Rey

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

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 benefits from adopting a noisy positioning strategy, which limits the information available to consumers. This induces consumers to keep searching but discourages 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.

Keywords: consumer search; sequintal search; directed search; product variety; choice overload; multiproduct firm; platform; steering (search for similar items in EconPapers)
JEL-codes: D42 L12 L15 (search for similar items in EconPapers)
Pages: 82
Date: 2023-04
New Economics Papers: this item is included in nep-dcm and nep-des
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Related works:
Journal Article: Consumer Search, Steering, and Choice Overload (2024)
Working Paper: Consumer search, steering and choice overload (2024)
Working Paper: Consumer Search, Steering and Choice Overload (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_421

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