Economics Insights @ CBS

Markets for information products exhibit varying degrees of competition on both the supply and the demand side. This paper studies the potential complementarity of information products, equilibrium information buying behaviors and information price setting in such markets. Our game-theoretic model consists of two information providers selling imperfect information to two competing clients and allows for different information quality levels as well as varying degrees of client competition.

Defaults have such powerful and pervasive effects on consumer behavior that they could be considered “hidden persuaders” in some settings. Ignoring defaults is not a sound option for marketers or consumer policy makers. The authors identify three theoretical causes of default effects—implied endorsement, cognitive biases, and effort—to guide thought on the appropriate marketer and policy maker responses to the issues posed for consumer welfare and consumer autonomy, including proposals for benign “nudges” of behavior.

Accusations of wrongdoing, baseless or justified, can severely tarnish a company's reputation. Once disseminated, even baseless accusations can persist and cause considerable damage for a company. This study examines the proactive crisis communication strategy of inoculating individuals against invalid accusations before they go viral. An experiment was conducted in a real world consumer context among members of an online consumer panel using an electronics discounter as the research stimulus.