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Random Encounters and Information Diffusion about Product Quality

Gabszewicz, Jean J.; Marini, Marco A.; Zanaj, Skerdilajda - 2021

This paper explores how social interactions among consumers shape markets. In a two-country model, consumers meet and exchange information about the quality of the goods. As information spreads, the demands evolve, affecting the prices and quantities manufactured by profit-maximizing firms. We...

Persistent link: https://www.econbiz.de/10012501720

Mergers under asymmetric information - is there a lemons problem?

Borek, Thomas; Bühler, Stefan; Schmutzler, Armin - 2004

We analyze a Bayesian merger game under two-sided asymmetric information about firm types. We show that the standard prediction of the lemons market model-if any, only low-type firms are traded-is likely to be misleading: Merger returns, i.e. the difference between pre- and post-merger profits,...

Persistent link: https://www.econbiz.de/10010315535

Nash Competive Equilibria and Two Period Fund Separation

Hens, Thorsten; Reimann, Stefan; Vogt, Bodo - Institut für Schweizerisches Bankwesen <Zürich>; … - 2004

We suggest a simple asset market model in which we analyze competitive and strategic behavior simultaneously. If two-fund separation is found to hold across periods for competitive behavior, it also holds for strategic behavior. In this case the relative prices of the assets do not depend on...

Persistent link: https://www.econbiz.de/10005858107

Pay-What-You-Want in Competition

Samahita, Margaret - 2015

Pay-What-You-Want (PWYW) pricing schemes are popular in certain industries and not others. We model the seller's choice of pricing scheme under various market structures assuming consumers share their surplus. We show that the profitability and popularity of PWYW depend not only on consumers'...

Persistent link: https://www.econbiz.de/10013208736

Targeted information and limited attention

Hefti, Andreas; Liu, Shuo - 2016

We study targeted information in a duopoly model with differentiated products, allowing for consumers with limited attention. The presence of inattentive consumers incentivizes firms to behave as if they were mass-advertisers, despite their ability to direct their messages precisely towards...

Persistent link: https://www.econbiz.de/10011663189

Targeted information and limited attention

Hefti, Andreas; Liu, Shuo - 2019

We examine the implications of limited consumer attention for the targeting decisions of competing firms. Limited attention alters the strategic role of information provision as firms may become incentivized to behave as mass advertisers, despite perfect targeting abilities. We analyze the...

Persistent link: https://www.econbiz.de/10012155365

Increasing Dominance - The Role of Advertising, Pricing and Product Design

Kretschmer, Tobias; Stamm, Mariana (Roesner) - 2010

Despite the empirical relevance of advertising strategies in concentrated markets, the economics literature is largely silent on the effect of persuasive advertising strategies on pricing and market structure and increasing (or decreasing) dominance. We propose a simple model of persuasive...

Persistent link: https://www.econbiz.de/10014198480

Nonlinear pricing with self-control preferences

Esteban, Susanna; Miyagawa, Eiichi; Shum, Matthew - 2003

This paper studies optimal nonlinear pricing for a monopolist when consumers' preferences exhibit temptation and self-control as in Gul and Pesendorfer (2001a). Consumers are subject to temptation inside the store but exercise self-control, and those foreseeing large self-control costs do not...

Persistent link: https://www.econbiz.de/10010293447

Nonlinear Pricing and the Utility Possibility Set

Andersson, Tommy - 2005

We consider nonlinear pricing policies that are designed by a social welfare maximizer who operates under a non-negative profit requirement. In our two-type economy, we characterize the set of all feasible nonlinear pricing policies and the frontier of the utility possibility set. Our results...

Persistent link: https://www.econbiz.de/10013208477

Pre-play communication with forgone costly messages: Experimental evidence on forward induction

Blume, Andreas; Kriss, Peter H.; Weber, Roberto - 2014

We study communication in a two-player coordination game with Pareto-ranked equilibria. Prior research demonstrates … that efficient coordination is difficult without communication but obtains regularly with (mandatory) costless pre … costs dramatically reduce message use, but efficient coordination of actions occurs with similar frequency to that observed …

Persistent link: https://www.econbiz.de/10011282459