Choice Manipulation Through Comparability in Markets with Verifiable Multi-Attribute Products
We illustrate how an information sender may use unverifiable signals regarding a set of substitute products located in an alternative market to manipulate the choices made by uninformed but perfectly rational decision makers (DMs) within the verifiable market where the information sender operates. We do so by defining an optimal information gathering structure for rational DMs who acquire information sequentially from a set of multidimensional products. The resulting strategic signaling environment delivers two main results that are illustrated numerically. First, in order for the sender to successfully manipulate the information gathering and choice behavior of DMs, he should release signals on characteristics that differ from their most preferred ones. Second, the capacity of the sender to manipulate the behavior of DMs depends negatively on his reputation regarding the expected value of the unobserved characteristics guaranteed to DMs within the market where he operates. Normative applications to online search environments conditioned by the provision of strategic reviews in social media are presented.
Di Caprio, Debora; Santos-Arteaga, Francisco J.; and Tavana, Madjid, "Choice Manipulation Through Comparability in Markets with Verifiable Multi-Attribute Products" (2014). Business Systems and Analytics Faculty Work. 187.