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Attraction versus Persuasion: Information Provision in Search Markets

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  • Pak Hung Au
  • Mark Whitmeyer

Abstract

We consider a model of oligopolistic competition in a market with search frictions, in which competing firms with products of unknown quality advertise how much information a consumer’s visit will glean. In the unique symmetric equilibrium of this game, the countervailing incentives of attraction and persuasion yield a payoff function for each firm that is linear in the firm’s realized effective value. If the expected quality of the products is sufficiently high (or competition is sufficiently fierce), this corresponds to full information: firms provide the first-best level of information. If not, this corresponds to information dispersion: firms randomize over signals.

Suggested Citation

  • Pak Hung Au & Mark Whitmeyer, 2023. "Attraction versus Persuasion: Information Provision in Search Markets," Journal of Political Economy, University of Chicago Press, vol. 131(1), pages 202-245.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/720984
    DOI: 10.1086/720984
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    Cited by:

    1. Lyu, Chen, 2023. "Information design for selling search goods and the effect of competition," Journal of Economic Theory, Elsevier, vol. 213(C).
    2. Jan Knoepfle, 2024. "Dynamic Competition for Attention," Papers 2409.18595, arXiv.org, revised Oct 2024.
    3. He, Wei & Li, Jiangtao, 2023. "Competitive information disclosure in random search markets," Games and Economic Behavior, Elsevier, vol. 140(C), pages 132-153.
    4. Teddy Mekonnen & Zeky Murra-Anton & Bobak Pakzad-Hurson, 2023. "Persuaded Search," Papers 2303.13409, arXiv.org, revised Aug 2024.
    5. Pak Hung Au & Mark Whitmeyer, 2024. "Attraction Via Prices and Information," Papers 2402.11754, arXiv.org.
    6. Pietro Dall'Ara, 2024. "Persuading an inattentive and privately informed receiver," Papers 2408.01250, arXiv.org.

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