This paper investigates whether aggregate consumer learning together with consumer heterogeneity in price sensitivity could explain why (i) there is a slow diffusion of generic drugs into the market, and (ii) brand-name originators keep increasing their prices over time even after the number of...

Consumers choosing flat-rate contracts tend to have insufficient usage to warrant the cost, particularly for new products. We propose and estimate a Bayesian learning model of tariff and usage choice that explains this "flat-rate bias'' without relying on behavioral misjudgments or...

The consumer search literature mostly considers independently distributed products. In contrast, I study a model of directed search with infinitely many products whose valuations are correlated through shared attributes. I propose a tractable, systematic, history-dependent scoring system based...

We characterize the dynamics of an industry in which demand and costs are constantly evolving so that firms are always adjusting output in response. Firms receive private information about their costs and privately observe components of demand. In addition, firms extract information from prices...

I explore the endogenous joint evolution of demand and supply in new markets. Firms and consumers learn, in a Bayesian fashion, by observing the behavior of other firms and consumers, respectively. As a result, endogenous information diffusion takes place on both sides of the market. In...

Hotellings berühmtes "Prinzip der minimalen Differenzierung" behauptet, dass zwei Firmen, die sich miteinander in räumlichem Wettbewerb befinden, dieselbe Position wählen. Wenn man räumlichen Wettbewerb als Modellierung von Produktdifferenzierung versteht, bedeutet dieses, dass die Firmen...

Self-interested agents produce information in an attempt to convince a principal to act on their behalf. Agents provide less informative evidence than the principal prefers since doing so maximizes the probability the principal acts in their favor. If the principal faces constraints that limit...

This paper empirically studies how social learning among consumers shapes firms' optimal strategies of using advertising to signal product quality. I present an equilibrium model that describes both consumers' and firms' learning and decision-making under quality uncertainty. My model allows me...

Better informed consumers may be treated preferentially by firms since their consumption serves as a quality signal for other customers. For normal goods this results in wealthy individuals being treated better than poor individuals. We investigate this phenomenon in an equilibrium model of...

We study third-degree price discrimination in the presence of uninformed buyers who extract noisy information from observing prices. In a noisy learning environment, price discrimination can be detrimental to the firm and beneficial to the consumers. On the one hand, discriminatory pricing...