2022 Fiscal Year Research-status Report
Social Learning, Consumer Search and Firms' Dynamic Strategies: A Theoretical Approach
| Project/Area Number |
21K13300
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| Research Institution | Kyoto Sangyo University |
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Principal Investigator |
潘 聡 京都産業大学, 経済学部, 准教授 (30807425)
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| Project Period (FY) |
2021-04-01 – 2024-03-31
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| Keywords | Social Influencers / Consumer Search / Projection-bias / Personalized Pricing / Uniform Pricing / Group Pricing |
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| Outline of Annual Research Achievements |
In 2022, I continued working on my two projects related to consumer search and social learning. One project focuses on examining how consumers' search behaviors are influenced by their changing tastes and a psychological bias known as projection bias. Contrary to my initial prediction that higher search costs would increase firms' marketing power, resulting in higher equilibrium prices and profits, I discovered that, in the presence of consumers' changing tastes and projection bias, higher search costs may actually reduce firms' market power and lead to lower equilibrium prices. Additionally, I confirmed that higher search costs help address consumers' problem of excessive searching, thereby improving social welfare.
In my second subproject, I explored how the presence of loyal consumers affects the searching behavior of non-loyal consumers. I found that a firm may strategically allow its rival to be searched first in order to alleviate competition. While this result was initially demonstrated through numerical examples in 2021, I further developed it using more comprehensive methodologies in 2022.
Furthermore, I completed a paper that examines how firms choose their pricing schemes when faced with heterogeneous consumer groups. My findings reveal that personalized pricing is the unique Nash equilibrium outcome. However, contrary to existing literature suggesting that personalized pricing yields lower profits compared to uniform pricing, I discovered that personalized pricing can be more advantageous. I published this paper in the SSRN discussion paper series.
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| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
My project is progressing smoothly. In my first subproject, I have derived both managerial and policy implications from my theoretical results. In my second subproject, as outlined in my research proposal, I have successfully integrated customer reviews into my model. Additionally, I have conducted a welfare analysis to examine how biased consumer search negatively impacts overall welfare. Moreover, the findings from my completed paper contribute to the advancement of my ongoing subprojects.
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| Strategy for Future Research Activity |
My research in 2023 will align with the objectives outlined in my research proposal. Firstly, I will focus on incorporating consumers' decision-making process regarding whether to write a product review. Additionally, I will investigate firms' decision-making process concerning whether to compensate reviewers. Moreover, it is important for me to establish the existence of the equilibrium that was derived in my research conducted in 2022. Furthermore, I aim to complete at least one paper and submit it to academic conferences, the SSRN discussion paper series, and an academic journal.
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| Causes of Carryover |
The textbook "Industrial Organization in Context" is set to be republished with a new edition in 2023. Due to this upcoming release, I made the decision not to purchase it in 2022. Consequently, I have planned to acquire the textbook during 2023.
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