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| Author: | Diehl, K. Kornish, L. J. Lynch, J. G. Jr. |
| Title: | Smart Agents: When Lower Search Costs for Quality Information Increase Price Sensitivity |
| Journal: | Journal of Consumer Research
2003 : JUN, VOL. 30:1, p.56-71 |
| Index terms: | CONSUMER INFORMATION QUALITY PRICES MODELS |
| Language: | eng |
| Abstract: | Recent consumer research suggests that lowering search costs for quality information reduces consumer price sensitivity by creating greater perceived differentiation among brands. The authors argue that lowering quality search costs by smart agents can have the opposite effect on differentiation and price sensitivity. Smart agents screen through a universe of alternatives, recommending only a handful well-matched to the customer's quality preferences. The authors present an analytic model for markets in which price and quality are correlated. Then they deduce that ordering can cause price and quality to increase or decrease depending on the slope of the price- quality relationship in comparison with the relative importance of price in the utility function. |
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