Strategic pricing with rational inattention to quality

• 成果类型: Article
• 署名作者: Martin, Daniel
• 署名单位: Northwestern University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2017.03.007
• 发表日期: 2017
• 页码: 131-145
• 关键词: rational inattention; limited attention; Strategic naivete; Price signaling

摘要

Using a standard strategic pricing game, I determine how sellers set prices when facing buyers who are rationally inattentive to information about product quality. Two cases are studied: strategically sophisticated buyers who are rationally inattentive to exogenous information about quality and strategically naive buyers who are rationally inattentive to strategic information about quality. In both cases, there exists an equilibrium where high quality sellers price high and low quality sellers mimic them by pricing high with a positive probability. This mimicking rate is uniquely identified and determines the informativeness of prices. In general, a drop in the marginal cost of attention results in more informative prices, but I identify conditions for which a drop in the marginal cost of attention can result in less informative prices. (C) 2017 Elsevier Inc. All rights reserved.