Consumers often search for product information to resolve valuation uncertainties before purchasing. Since they cannot examine all alternatives because of their limited information-acquisition ability, they conduct a two-stage search, called consider-then-choose. In the first stage, they decide a consideration set which is a subset of all available alternatives. In the second stage, they resolve the uncertainty about all products in this consideration set and choose the one with the highest utility. We extend assortment optimization under consumer choice behavior by incorporating consumer anticipated regret into the consideration set formation. Specifically, after purchase, when consumers passively notice whether an unconsidered product is more suitable than the purchased one or not, they might regret having decided a small consideration set and not devoted enough effort to searching or regret having decided a large consideration set and devoted too much effort to searching. We show that if consumers anticipate the post-purchase regret when deciding a consideration set, in some conditions the firms should offer some products that consumers will not consider. Based on this finding, we develop fully-polynomial approximation schemes or exact conic formulation for a variety of assortment problems under the consider-then-choose models with anticipated regret. For the joint assortment planning and pricing problem with homogeneous consumers, we show that the intrinsic-utility ordered assortment and the price policy that charges the same price for the products except at most those outside the consideration set and one within it are optimal.
Dieser Eintrag ist Teil der Universitätsbibliographie.
Search Authors in