New Product Launch : Herd Seeking or Herd Preventing?

A decision maker offers a new product to a fixed number of adopters. The decision maker does not know the value of the product while adopters receive some private information about the value. We study how the decision maker may influence learning among adopters by manipulating the launch sequence when both the decision maker and adopters can learn about the product's value from previous adoption decisions. We derive conditions under which the decision maker prefers a sequential launch to a simultaneous launch. The conditions depend on the cost of adoption and the initial assessment of the product. We derive the optimal launch sequence. The decision maker's dynamic equilibrium strategy endogenizes informational herding