Consumer search, steering and choice overload

Volker Nocke and Patrick Rey ()
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Patrick Rey: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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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 ben- efits from adopting a noisy positioning strategy, which limits the information available to consumers. This induces consumers to keep searching but discour- ages 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; Sequential search; Directed search; Product Variety; Choice overload; Multiproduct firm; Platform; Steering (search for similar items in EconPapers)
Date: 2024-05
Note: View the original document on HAL open archive server: https://hal.science/hal-04867198v1
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Published in Journal of Political Economy, 2024, 132 (5), pp.1684-1739. ⟨10.1086/728108⟩

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Related works:
Journal Article: Consumer Search, Steering, and Choice Overload (2024)
Working Paper: Consumer Search, Steering and Choice Overload (2023)
Working Paper: Consumer Search, Steering and Choice Overload (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04867198

DOI: 10.1086/728108

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