Consumer search with anticipated regret

Abstract

Uncertainty before purchase often gives rise to postpurchase emotions that consumers might anticipate when making purchase decisions. Our study investigates how consumers' anticipated postpurchase regret affects their optimal search behavior and how this affects firms' price and assortment competition. The key tension considered in this study is that consumers balance between saving the cost of product evaluation by searching less and alleviating the potential postpurchase regret on their purchase by searching more. We use a classical sequential search framework to examine this key tension. Our results show that anticipated regret encourages more intense search across competitive alternatives, leading to an intensified price competition when search depth is exogenous (searching a fixed number of attributes) or when search depth is endogenous but full‐depth search (inspecting all attributes) emerges (with high regret intensity). However, when search depth is endogenous but partial‐depth search (inspecting a subset of attributes) emerges (with low regret intensity), the blessing effect of anticipated regret on softening firms' price competition begins to emerge. In addition, anticipated regret can achieve a “win‐win‐win” situation for consumers, firms, and the social planner. Moreover, multiproduct firms use different competitive devices with different levels of regret intensity: When regret intensity is low (high), firms focus on assortment (price) competition to retain consumers. The relevant managerial implications are discussed.

Optimal return shipping insurance policy with consumers' anticipated regret

“…Our work also adds to the literature on consumers' anticipated regret. Many researchers have explored the role of anticipated regret in different contexts, such as competition between standard and customized products (Syam et al, 2008), advance selling (Nasiry & Popescu, 2012), product innovation (Jiang et al, 2017), product-line design (Zou et al, 2020), on-demand service platforms (Jiang et al, 2021), and sequential consumers search framework (Jin et al, 2022). In particular, Jiang et al (2017) discover that consumers' strong switching regret differentiates the uninformed consumers more from the informed ones in a duopoly market.…”

“…Moreover, selling more goods may yield less revenue. Jin et al (2022) explore how consumers' optimal search behavior is affected by the anticipated regret under a classic framework of sequential search. Their results show that the anticipated regret can intensify or soften price competition among firms.…”

Investment strategies of information‐provision technology in the platform‐based supply chain

“…Specifically, in the model of simultaneous search, the consumer will firstly inspect and search all available products and then make a purchase among all searched products. Related studies include Ratchford (1982), Morgan and Manning (1985), Cachon et al (2005), Cachon et al (2008), Liu and Dukes (2013), Liu and Dukes (2016), Wang and Sahin (2018), Jin et al (2020), Jin et al (2022). While, in the model of sequential search, using a stopping rule, the consumer sequentially searches products one by one until a product is purchased.…”

“…In this paper, we follow the model of simultaneous search and build a general model considering the sellers' investment level in information-provision tech. Interestingly, several papers assume that consumer's unit search cost is fixed (Jin et al, 2020(Jin et al, , 2022Wang & Sahin, 2018), while we assume that the investment level in information-provision tech can change consumer's unit search cost. Following the simultaneous search depth model, our results show that the consumer's search effort shares a unimodal structure regarding the unit search cost and the uncertainty degree of products' information.…”

Impacts of consumer regrets on product demos and pricing strategy in new product release

“…The literature has studied the impact of consumers' anticipated regret on the pricing of new products in the context of product presale (Nasiry & Popescu, 2012), competition (Jiang et al, 2017; Jin et al, 2022), and substitutable products (Kuang & Ng, 2018). Our research differs from the existing literature in that (i) the demo degree is a decision variable and we incorporate it into a pricing model of the new generation product given consumers' anticipated regret.…”