Template-Type: ReDIF-Paper 1.0
Title: Endorsements and Referrals: Product Recommendations in Bilateral Trade
Author-Name: Peter Achim
Author-Email: peter.achim@york.ac.uk
Author-Name: Bojia Li
Author-Email: bojia.li@york.ac.uk
Author-Name: Lily Ling Yang
Author-Email: lily.yang@uni-mannheim.de
Classification-JEL: D42, D83, M31
Keywords: Consumer learning, Monopoly pricing, Third-party information provision

Abstract: This paper examines how a monopoly seller strategically employs pricing strategies and incentive mechanisms to influence consumer learning in the presence of
a third-party information provider. Without direct payments, the seller influences consumer learning indirectly through distinct pricing strategies, which either
deter or induce information acquisition. With direct payments, the seller can influence recommendations directly. "Endorsements", which tie payments to
recommendations, remove informativeness and unambiguously harm the buyer. In contrast, "referrals", which tie payments to sales, can enhance consumer
surplus and can even lead to Pareto improvements.

Note: 
Length: 34
Creation-Date: 2025-02
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp657
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_657