Inattentive consumers and product quality
WebThis paper presents a model in which some consumers shop on the basis of price alone, without attention to product quality. A firm may “cheat” (i.e., cut quality) to exploit these inattentive consumers. In the unique symmetric equilibrium, firms follow a mixed strategy involving both price and quality dispersion. WebAug 15, 2016 · The Demand for Natural Food Products. Clean labels are very popular throughout the industry and the demand for simple ingredients is influencing the sales of …
Inattentive consumers and product quality
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WebThis paper studies a model in which some consumers shop on the basis of price alone, without attention to potential differences in product quality. A firm may offer a low-quality product to exploit these inattentive consumers. In the unique symmetric equilibrium of the model, firms choose prices with mixed strategies, similarly to Varian (1980) in which … WebThis paper presents a model in which some consumers shop on the basis of price alone, without attention to product quality. A firm may “cheat” (i.e., cut quality) to exploit these …
WebA firm may offer a low-quality product to exploit these inattentive consumers. In the unique symmetric equilibrium of the model, firms choose prices with mixed strategies, similarly … WebSep 17, 2024 · We find that consumers that can gather and process information at approximately no cost rationally select to be attentive while consumers that must incur a cost rationally select to be inattentive.
WebA firm may “cheat” and offer a worthless product to exploit these inattentive consumers. In the unique symmetric equilibrium, firms follow a mixed strategy involving both price and quality dispersion. The presence of inattentive consumers harms attentive consumers, and enables firms to earn positive profits. WebIn some markets, consumers do not know the attributes of all the products that are available in the market, or the prices at which they are offered. To overcome this uncertainty, consumers may gather and process information about those attributes and prices.
WebWhen consumers have heterogeneous costs of information, firms selling low-quality products may choose to set the highest prices. Citation Matějka, Filip, and Alisdair McKay. 2012. "Simple Market Equilibria with Rationally Inattentive Consumers." American Economic Review, 102 (3): 24-29. DOI: 10.1257/aer.102.3.24
WebJul 5, 2012 · A firm may offer a low-quality product to exploit these inattentive consumers. In the unique symmetric equilibrium of the model, firms choose prices with mixed … flannery ford waterford miWebThe presence of inattentive consumers harms attentive consumers, and enables firms to earn positive profits. With many sellers, approximately half of them will cheat. A market … flannery foundationWebMay 1, 2009 · The presence of inattentive consumers harms attentive consumers, and enables firms to earn positive profits. With many sellers, approximately half of them will … flannery estate servicesWebThe spillover amounts to an average drop of $2,057 in consumer valuations of these manufacturers’ vehicles and a 34.6% reduction in their annual sales. We substantiate our interpretation that the estimates reflect a reputation spillover using data on internet search behavior and direct measures of consumer sentiment from Twitter. flannery fire protection logoWebThis paper examines the role of consumer preferences, costs, and price competition in determining the competitive product strategy of a firm. In the model studied here, there are two identical firms competing on product quality and price. They face consumers who prefer a higher quality product to a lower quality product, but differ in how much ... can sig sauer p365 shoot p ammoWebFeb 5, 2024 · Abstract We study a monopolistic firm’s various sales strategies to sell a new product to a rationally (in)attentive consumer who can conduct costly learning to resolve valuation uncertainty. can si joint fusion be reversedWebSocial is the preferred product discovery platform for consumers age 18-44. 80% of social media marketers believe consumers will buy products directly in social apps more often than on brands ... flannery folding patio dining chair