Choice Manipulation Through Comparability in Markets with Verifiable Multi-Attribute Products

Abstract

We illustrate how an information sender may use unverifiable signals regarding a set of substitute products located in an alternative market to manipulate the choices made by uninformed but perfectly rational decision makers (DMs) within the verifiable market where the information sender operates. We do so by defining an optimal information gathering structure for rational DMs who acquire information sequentially from a set of multidimensional products. The resulting strategic signaling environment delivers two main results that are illustrated numerically. First, in order for the sender to successfully manipulate the information gathering and choice behavior of DMs, he should release signals on characteristics that differ from their most preferred ones. Second, the capacity of the sender to manipulate the behavior of DMs depends negatively on his reputation regarding the expected value of the unobserved characteristics guaranteed to DMs within the market where he operates. Normative applications to online search environments conditioned by the provision of strategic reviews in social media are presented.

An ordinal ranking criterion for the subjective evaluation of alternatives and exchange reliability

“…That is, the way and order in which information is displayed can be determined strategically to influence the choice behavior of the DMs [38,13]. Choice manipulation instruments range from standard framing effects [49,28] to information display and signaling strategies when searching online [19,30,32,10,16]. In this latter case, the ORR criterion can be modified and adapted to account for reputation and trust in sequential information acquisition environments.…”