This paper develops a simple model of sequel production for experience goods, showing how reputation shapes a producer's incentives. Producers differ in productivity, which determines how much effort they invest. A sequel is made only if the previous installment exceeds a quality threshold,...

The impact of product ratings is significant in the experience goods market, whose intangible products are difficult to evaluate before consumption. Product ratings can reduce information asymmetries because they represent a credible signal of quality and thus positively affect product sales. In...

Purpose - In the context of omnichannel distribution development, this study aims to understand how and why trying products out helps people make good purchase decisions (i.e. decisions that they do not regret later). Design/methodology/approach - The paper uses mixed methods consisting of an...

We model the potential for a company bundling experience goods to obtain an advantage over conventional individual sales. Using the streaming video industry as an example, we consider the unknown attributes of films. Bundling services can be beneficial by guiding consumers' product selections,...

A key precept of brand extension theory is that brand extension, as opposed to new brand, reduces the risk of new product trial in experience goods categories. In this paper we argue that this property has specific testable implications for the dynamics of sales. In particular, in the movie...

A consumer wants to buy one of three different products. An expert observes which of the three products is the best match for the consumer. Under linear prices a monopolistic expert may truthfully reveal, may partially reveal, and may not reveal at all her information. The outcome is...

The advent of social media platforms has enabled firms to disseminate information to their customers via new channels. A prominent example of this phenomenon is firms using online reviews from expert opinion leaders to inform customers about the quality of new experience goods. As customers rely...

Purpose The Internet has introduced new ways of conducting business. Online auction of nonperishable experience goods (NPEG) items, which are generally rare, expensive and durable and need to be experienced to be valued, is one area that is undergoing significant change. Online auction platforms...

Virtual-Reality-Anwendungen ermöglichen es Anbietern von Erfahrungsgütern durch innovative Produktpräsentationen die inhärenten Informationsasymmetrien zu reduzieren. Dadurch kann den potenziellen Kunden eine effiziente Leistungsbeurteilung ermöglicht und das Risiko einer...

This paper explores the price determinants of fine wines in a competitive and opaque market. Intense international competition, high production costs and information asymmetries, result in Swiss wine prices that mostly depend on collective reputation, production techniques, and product...

This paper analyzes a mechanism through which a supplier of unknown quality can overcome its asymmetric information problem by selling via a reputable downstream rm. The supplier s adverse-selection problem can be solved if the downstream rm has established a reputation for delivering high...

Purpose This study aims to investigate the extent and pattern of the influence of one of the most important decision-making tools in the context of social commerce. This study demonstrates how much customer testimonials (including verified purchases and ordinary users) can influence the sales...

We analyze the substitutability between brick-and-mortar stores and e-Commerce. Using a novel data set on the German book market we find that between 26 and 55% of the decrease in book sales from 2014-2017 can be explained by the decrease in the number of bookstores. This indicates that...

We analyze the substitutability between brick-and-mortar stores and e-Commerce. Using a novel data set on the German book market we find that between 26 and 55% of the decrease in book sales from 2014-2017 can be explained by the decrease in the number of bookstores. This indicates that...

In this paper, we consider an experience composite good, each of whose components is produced by independent firms sharing the information about the quality. We obtain two main results. First, if the production costs are equal across qualities, the undistorted equilibrium is the unique...

In a simple static model of differentiated experience goods supplied by a single seller, we show that both a uniform price equilibrium and a price signalling equilibrium coexist. This is in contrast to the received wisdom that price signalling of quality is nonviable in static settings. We also...