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Strategic Inattention in Product Search

Adrian Hillenbrand () and Svenja Hippel ()
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Adrian Hillenbrand: Max Planck Institute for Research on Collective Goods
Svenja Hippel: Max Planck Institute for Research on Collective Goods

No 2017_21, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: Rapid technological developments in online markets fundamentally change the relationship between consumers and sellers. Online platforms can now easily gather data about the consumer and his search behavior, that allow for price discrimination. Therefore the consumers’ product search becomes a strategic choice. Consumers face a trade-off: Search intensely and receive a better fit at a potentially higher price or restrict search behavior – be strategically inattentive – and receive a worse fit, but maybe a better deal. We study the resulting strategic buyer-seller interaction theoretically as well as experimentally. Our experimental results shed a critical light on the added value for consumers through the rise of online platforms.

Keywords: strategic inattention; price discrimination; information transmission; consumer choice; experiment (search for similar items in EconPapers)
JEL-codes: D11 D42 D82 D83 L11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-exp, nep-mkt and nep-pay
Date: 2017-10, Revised 2019-09
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