Author: Man Xie

Publisher:

Published: 2021

Total Pages: 0

ISBN-13:

Consumers make decisions under incomplete information. In addition to the generic information availability and accessibility, how firms selectively provide information and how consumers collect information all influence consumer decisions, including product choice, purchase, and reselling. In Essay One, we study the impacts of firms providing information on product list prices on online consumer purchases. Our examination of Amazon data finds that (1) displaying list price in information-rich online markets has no impact on sales when used as a standalone marketing strategy, but can positively or negatively influence sales if implemented concurrently when the price decreases; (2) the direction of that influence depends on user-generated information; and (3) list price interacts with price promotion via both price sensitivity and demand shift. Specifically, when a product with favorable consumer reviews lowers its price, simultaneously displaying list price boosts the effectiveness of price promotion by (i) shifting demand upwards and (ii) increasing price sensitivity. However, when a product with unfavorable reviews lowers its price, simultaneously displaying list price shifts demand downwards, which decreases sales or even destroys the sales gain that price promotion would have generated without list price. In Essay Two, we study the impacts of imperfect information from the initial choice set and post-purchase consumption on consumers' reselling price decisions in C2C (consumer to consumer) markets. We model C2C markets and show they significantly differ from traditional B2C (business to consumer) markets. For example, consumers (as buyers) tend to buy products with overlooked weaknesses rather than overlooked strengths, resulting in over-optimistic choices and post-choice remorse (i.e., "buyer's remorse"). Surprisingly, both increase with a more exhaustive choice search. Moreover, even without buyer's remorse, imperfect information alone causes consumers' valuations (as owners) and asking prices (as resellers) to decrease with the duration of ownership as residual uncertainty decreases. Hence, unlike traditional B2C selling, we find that C2C reselling asking prices depend on reseller expected utility from prolonged consumption, the original consideration set size, the duration of ownership, and residual uncertainty. Our empirical analyses provide evidence from both experimental data and aggregate real estate data.