Technical Note-Signaling Product Quality Through a Trial Period

• 成果类型: Article
• 署名作者: Wang, Shouqiang; Ozkan-Seely, Gulru F.
• 署名单位: University of Texas System; University of Texas Dallas; University of Washington; University of Washington Bothell
• 刊物名称: OPERATIONS RESEARCH
• ISSN/ISSBN: 0030-364X
• DOI: 10.1287/opre.2017.1675
• 发表日期: 2018
• 页码: 301-312
• 关键词: price-discrimination; INFORMATION; search; GOODS; uncertainty; strategy; example; time

摘要

It has become a ubiquitous practice for firms that sell new products, such as software, to offer consumers time-locked product trial periods free of charge. We identify trial length as a nuanced signaling instrument, which, together with the price signal, a firm can use to communicate proprietary information about its product quality. We show that a high-quality firmoffers a longer trial period and sets a higher price, and is rewarded with a higher profit, relative to its low-quality counterpart. Our finding extends to cases where the firm faces ex ante heterogeneous consumers or when the firm competes with an incumbent product.