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Influencing Search

Janssen, Maarten C W; Williams, Cole

Authors

Maarten C W Janssen



Abstract

We show that in search markets an influencer who recommends a product to her followers improves consumer surplus and total welfare despite the firm paying for her recommendation. As consumers learn their value for the product upon search, they will not buy at the recommended firm if they learn their value is low. The threat of search incentivizes firms to offer the influencer a financial contract involving a commission and incentivizes the influencer to be honest in her recommendation. Provided the influencer's search cost is not too high, she also has an incentive to acquire information and give informative recommendations. These informative equilibria are more difficult to sustain if influencers compete with each other.

Journal Article Type Article
Acceptance Date Mar 1, 2023
Deposit Date Jun 28, 2024
Journal The RAND Journal of Economics
Print ISSN 0741-6261
Electronic ISSN 1756-2171
Publisher Wiley
Peer Reviewed Peer Reviewed
Public URL https://durham-repository.worktribe.com/output/2504995
Publisher URL https://onlinelibrary.wiley.com/journal/17562171

This file is under embargo due to copyright reasons.






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