Price Competition with Consumer Confusion

• 成果类型: Article
• 署名作者: Chioveanu, Ioana; Zhou, Jidong
• 署名单位: Brunel University; New York University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2013.1716
• 发表日期: 2013
• 页码: 2450-2469
• 关键词: Bounded rationality; framing; oligopoly markets; frame dispersion; price dispersion

摘要

This paper proposes a model in which identical sellers of a homogeneous product compete in both prices and price frames (i.e., ways to present price information). Frame choices affect the comparability of price offers and may cause consumer confusion and lower price sensitivity. In equilibrium, firms randomize their frame choices to obfuscate price comparisons and sustain positive profits. The nature of the equilibrium depends on whether frame differentiation or frame complexity is more confusing. Moreover, an increase in the number of competitors induces firms to rely more on frame complexity and this may boost industry profits and lower consumer surplus.