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22.06. Micro Theory Seminar: Marcel Preuss

Micro Theory Seminar with Marcel Preuss (Mannheim University)

Event details
  • Micro Theory Seminar
When Jun 22, 2018
from 12:00 to 13:15
Where faculty room
Contact Name Stephan Lauermann
Contact Email
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Consumer Search with and without Tracking


In this paper, I develop a tractable framework with sequential consumer search to address the role of tracking on market outcomes. Tracking search histories is informative about consumers' valuations because different consumer types have different stopping probabilities. With tracking, the unique equilibrium price path is increasing whereas without tracking, an average uniform price prevails. Welfare effects largely depend on how tracking affects consumers' search persistence. For intermediate search costs, tracking based price discrimination exacerbates the sellers' hold-up problem and leads to inefficiently low search persistence. For high search costs instead, tracking prevents a market breakdown as low prices conditional on short search histories secure consumers a positive surplus from search. Tracking prevails endogenously when consumers can dynamically opt out from tracking. This holds since disclosing their search history is always individually rational for consumers, irrespective of the overall effect on consumer surplus.
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