We present a model in which some consumers shop on the basis of price alone, without paying attention to product quality. A firm may “cheat” and offer a worthless product to exploit these inattentive consumers. In the unique symmetric equilibrium, firms follow a mixed strategy involving both price and quality dispersion. The presence of inattentive consumers harms attentive consumers, and enables firms to earn positive profits. With many sellers, approximately half of them will cheat. A marke...Expand abstract
- Copyright date:
Inattentive consumers and product quality.
Views and Downloads
If you are the owner of this record, you can report an update to it here: Report update to this record