Template-Type: ReDIF-Paper 1.0
Title: Strategic Pricing and Ratings
Author-Name: Anton Sobolev
Author-Email: anton.sobolev@uni-mannheim.de
Author-Name: Konrad Stahl
Author-Email: kos@econ.uni-mannheim.de
Author-Name: André Stenzel
Author-Email: andre.stenzel@uni-mannheim.de
Author-Name: Christoph Wolf
Author-Email: christoph.wolf@unibocconi.it

Classification-JEL: D83, L12, L13, L81
Keywords: Online Markets, Rating, Reputation

Abstract: A seller serving two generations of short lived heterogeneous consumers sells a product under uncertain demand. We characterize the seller's optimal pricing, taking into account that the current period's price affects the information transmission to the next period consumers via consumer ratings. While the seller always prefers to generate more information, it is not necessarily in the consumers' interest. We characterize situations in which consumer surplus and welfare are decreasing in additional information. We provide conditions under which aggregate consumer surplus and welfare are lower with than without a rating system.

Note: 
Length: 28
Creation-Date: 2021-07
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp303
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2021_303