Full teaching responsibility for two introductory microeconomics classes. Developed and tested econometric approaches of estimating internet users' demand characteristics based on the data generated from a simulated internet economy. Economic Analysis and Database Management. As an information exchange platform, the internet makes possible communication among consumers at ever-declining costs and unprecedented speed. We are interested in how information exchange among the consumers on the internet affects the optimal strategies of all the players in the markets.
Analysis is carried out in three models.
This is the case of consumers posting their opinions voluntarily onto an online bulletin board or in a chat room. All the consumers who gain information from others are free riders. If the consumers are diverse in their beliefs about the product quality and the benefits from consuming the product, we show that the lower the variance among the beliefs, the more profitable for the firm to charge a lower price and build a larger clientele in the first period. We demonstrate that consumers have the incentive to form an information club to reduce the uncertainty about the product and hence enhance market efficiency. It is also profitable for an independent third party intermediary to collect information and sell it to the consumers.