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,...

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...

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...

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...

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...

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...

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...

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...

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...

We study a nonlinear pricing problem of experience goods in dynamic environments where consumers' private information evolves stochastically over time, and their present types and/or quitting costs are affected by their past consumptions. Our model sheds some light on the pricing of addictive...

In this study the dynamics of online product ratings is modeled based on the data for 59 items from 20 product categories. We account not only for the context dependence of subsequent reviews on previously posted reviews, but also for product type (search product or experience product). We...

This paper studies a firm's optimal dynamic pricing strategies for its new experience goods inmarkets where the distribution of consumers' valuations is ex ante unknown. We examine whetherand how the firm facing information asymmetry and demand uncertainty can signal its high qualityand learn...

This study examines the situation in which a monopolist offers freeware as an advertisement for the increase of demand to maximize profit even though the existence of such freeware will reduce the power of the monopolist in the market. This study proves that the successful application of...

The authors reexamine the Schmalensee effect from a dynamic perspective. Schmalsensee’s argument suggesting that high quality can be signaled by high prices is based on the assumption that higher quality necessarily incurs higher production cost. In this paper, the authors argue that firms...

Delacroix and Shi (Pricing and signaling with frictions, Journal of Economics Theory 2013) study a model featuring buyers with unit demands and sellers with unit supplies. The sellers may produce a high- or a low-quality good. The buyers get a signal about quality but the signalling technology...

The author reexamines the Schmalensee effect from a dynamic perspective. Schmalsensee’s argument suggesting that high quality can be signaled by high prices is based on the assumption that higher quality necessarily incurs higher production cost. In this paper, the author argues that firms...

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...

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...