Consumer confusion from price competition and excessive product attributes under the curse of dimensionality
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The purpose of our study is to (i) investigate the effects of the number of products, product attributes, and prices on consumer confusion, (ii) conduct a numerical analysis to check the robustness of the results, and (iii) present an example of the cell phone market in Japan. Following an ideal point model and embedding the number of products and product attributes, we clarify how these factors affect consumer confusion and purchase probability. We show that as the number of product attributes increases, the choice probability of each product becomes equal, implying that consumer confusion occurs. This result is robust to the introduction of prices as strategic variables.
KeywordsInformation overload Consumer confusion Price competition Product attributes Curse of dimensionality
The authors are grateful to the session participants at the 6th International Conference on Intelligent Decision Technologies. Ebina acknowledges a Grant-in-Aid for Young Scientists (B) from the Japanese Ministry of Education, Science, Sports, and Culture (15K17047). Kinjo acknowledges financial support from a Grant-in-Aid for Young Scientists (16K17203) from the Japan Society for the Promotion of Science.
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