Gan, Tan 
ORCID: 0000-0002-9483-7869 and Wu, Nicholas
(2024)
From doubt to devotion: trials and learning-based pricing.
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Abstract
An informed seller designs a dynamic mechanism to sell an experience good. The seller has private information about the product match, which affects the buyer’s private consumption experience. The belief gap between both parties, coupled with the buyer’s learning, yields mechanisms providing the skeptical buyer with limited access to the product and an option to upgrade if the buyer is swayed by a good experience. Depending on the seller’s screening technology, this takes the form of free/discounted trials or tiered pricing, which are prevalent in digital markets. Unlike static environments, having consumer data can reduce sellers’ revenue in equilibrium.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Official URL: | https://sites.google.com/yale.edu/tangan1996/home |
| Divisions: | Management |
| Subjects: | H Social Sciences > HB Economic Theory |
| JEL classification: | D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief |
| Date Deposited: | 19 Sep 2024 10:27 |
| Last Modified: | 20 Dec 2024 00:23 |
| URI: | http://eprints.lse.ac.uk/id/eprint/125462 |
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