Multi-Attribute Search and Informative Advertising
When considering whether or not to buy a product, the consumer can often evaluate different attributes of it. Due to limited attention, the consumer often can only search for information about one attribute at a time. Assuming that a product has two attributes, we study the optimal search strategy of the consumer by endogenizing the optimal attribute to search, when to keep searching for information, and when to stop searching and make a decision. We find that it is always optimal for the consumer to search for the attribute about which she has the higher uncertainty due to the faster speed of learning. The consumer only searches for the more uncertain attribute if she holds a strong prior belief about one of the attributes, and may search for both attributes otherwise. We then show how firms can influence consumers’ search behavior and increase profits through informative advertising. The firm does not advertise if the consumer’s prior beliefs about both attributes are extreme. Otherwise, the firm advertises the better attribute if the consumer is optimistic enough about the worse attribute, and advertises the worse attribute if the consumer is less optimistic about it
Year of publication: |
[2023]
|
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Authors: | Yao, Yunfei (Jesse) |
Publisher: |
[S.l.] : SSRN |
Subject: | Werbung | Advertising | Informationskosten | Information costs | Suchtheorie | Search theory | Konsumentenverhalten | Consumer behaviour | Informationsverhalten | Information behaviour |
Saved in:
freely available
Extent: | 1 Online-Ressource (37 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 30, 2023 erstellt |
Other identifiers: | 10.2139/ssrn.4512698 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014344011
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