The Good, the Bad, and the Complex: Product Design with Imperfect Information
- (pp. 187-226)
Abstract
We study the joint determination of product quality and complexity. In our model complexity affects how difficult it is for an agent to acquire information about product quality. An agent can accept or reject a product proposed by a designer, who can affect the quality and the complexity of the product. We find that complexity is not a necessary feature of low-quality products. An increase in designer–agent alignment leads to more complex but better-quality products. However, higher product demand or lower competition among designers leads to more complex and lower-quality products. We relate our findings to the existing empirical evidence.Citation
Asriyan, Vladimir, Dana Foarta, and Victoria Vanasco. 2023. "The Good, the Bad, and the Complex: Product Design with Imperfect Information." American Economic Journal: Microeconomics, 15 (2): 187-226. DOI: 10.1257/mic.20210114Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- G23 Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- L15 Information and Product Quality; Standardization and Compatibility
- L51 Economics of Regulation
- L84 Personal, Professional, and Business Services
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