Rapid technological developments in online markets fundamentally change relationship between consumers and sellers. Online platforms can easily gather data consumers' search behavior, allowing for price discrimination. Therefore, product becomes a strategic choice. Consumers face a tradeoff: Search intensely and receive fit at a potentially higher price or restrict search behavior, be strategically inattentive, receive a worse fit but maybe a better deal. We study the resulting strategic buyer interaction theoretically and experimentally. Our experimental results shed a critical on the added value for consumers through the rise of online platforms and on the effectiveness of current regulations.
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Strategic Inattention in Product Search
Rapid technological developments in online markets fundamentally change relationship between consumers and sellers. Online platforms can easily gather data consumers' search behavior, allowing for price discrimination. Therefore, product becomes a strategic choice. Consumers face a tradeoff: Search intensely and receive fit at a potentially higher price or r...
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