221 research outputs found
Dynamic Competitive Persuasion
We examine a dynamic game of competitive persuasion played between two
long-lived sellers over periods. Each period, each seller
provides information via a Blackwell experiment to a single short-lived buyer,
who buys from the seller whose product has the highest expected quality. We
solve for the unique subgame perfect equilibrium of this game, and conduct
comparative statics: in particular we find that long horizons lead to less
information
Persuading a Consumer to Visit
We consider a variation on the classic Weitzman search problem: competing
firms with products of unknown quality may design how much information a
consumer's visit will glean. After observing these information structures, the
consumer then decides how to search sequentially across the firms for a high
value product. If there are no search frictions, then there is a unique
symmetric equilibrium in pure strategies, and the firms are not fully
informative. With search frictions, the information a visit will reveal depends
in a systematic way on the ex-ante probability that a firm's product is high
quality. When the expected quality of the product is sufficiently high, there
is a unique symmetric equilibrium in which firms are fully informative. There,
a small search cost leads to the perfect competition level of information
provision--consumers gain when firms are forced to compete on information.
Conversely, in the low and medium expected quality cases there are no pure
strategy equilibria. Instead, firms mix over a continuum of levels of
information: in the low expected quality case they provide full information
with probability zero; and in the medium expected quality case they provide
full information with positive probability. In both cases there are mixed
strategy equilibria in which the firms' realized information structures are
Blackwell comparable. Moreover, though recall is permitted, in each case there
are equilibria in which the consumer never returns
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