Biased Beliefs in Search Marketst

• 成果类型: Article
• 署名作者: Gamp, Tobias; Kraehmer, Daniel
• 署名单位: Humboldt University of Berlin; University of Bonn
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20210007
• 发表日期: 2023
• 页码: 414-464
• 关键词: price beliefs; equilibrium; MODEL; consumers

摘要

We study the implications of biased consumer beliefs for search market outcomes in the seminal framework due to Diamond (1971). Biased consumers base their search strategy on a belief function that specifies for any (true) distribution of utility offers in the market a possibly incorrect distribution of utility offers. If biased consumers overestimate the best offer in the market, a novel type of equilibrium may emerge in which firms make exceptionally favorable offers in order to meet biased consumers' unreasonably high expectations, which then become partially self-fulfilling. Consequently, the pres-ence of biased consumers may improve the welfare of all consumers.