Associate Jun Yu recently had a paper published in the Games and Economic Behavior, a tier-one journal in SUFE list. The paper, titled “Consumer Search with Blind Buying”, was coauthored with Dr. Yanbin Chen, Dr. Sanxi Li and Dr. Kai Lin.
Abstract
This article proposes a sequential search model in which consumers freely observe products' prices and prior values before a search and decide whether and in which order to identify the match values for a positive search cost. We allow consumers to purchase a product without incurring a search cost to inspect the match value, which we call blind buying, under which the optimal search policy is no longer as per Weitzman (1979). When the match value has a symmetric distribution, both consumers and firms are indifferent to the search order, conditional on that blind buying does not take place in the first stage. We show that blind buying always increases total welfare, and increases market prices and industrial profits if and only if the first-sample search cost is below a threshold value. An increase in the search cost reduces equilibrium prices. Such a result is consistent with existing price-directed search models, but the underlying mechanisms are different. We also show that being prominent can adversely affect a firm if the match value is asymmetrically distributed, which contrasts the literature.
Associate Professor Jun Yu joined the SOE as a tenure-track faculty member in 2014. He holds a PhD in economics from Northwestern University in the U.S.A., and his primary area of research is games and information economics, intermediate microeconomics and advanced microeconomics.