When designing new products, firms face not only customer preference uncertainty, but also sophisticated social influence among customers. The social influence suggests that customers' decisions could be influenced by the mainstream view/opinion shared by the crowd; e.g., conformist customers...

We study the estimation of preference heterogeneity in markets where consumers engage in costly search to learn product characteristics. Costly search amplifies the way consumer preferences translate into purchase probabilities, generating a seemingly large degree of preference heterogeneity. We...