An Economic Analysis of Consumer Learning for Online Entertainment Shopping

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)Not applicablepeer-review

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Detail(s)

Original languageEnglish
Title of host publicationPacific Asia Conference on Information Systems, PACIS 2016 - Proceedings
PublisherPacific Asia Conference on Information Systems
ISBN (Print)9789860491029
StatePublished - Jun 2016

Conference

Title20th Pacific Asia Conference on Information Systems (PACIS 2016)
LocationNice Prince Hotel
PlaceTaiwan
CityChiayi
Period27 June - 1 July 2016

Abstract

Entertainment shopping supported by pay-to-bid auction is an emerging online business model in recent years. Consumers expect both entertainment value and monetary return from their participation in entertainment shopping. We propose a dynamic structural model to study consumers' online shopping behavior. We analyze the learning process of consumers from two perspectives based on the Bayesian updating framework: (1) consumers update their beliefs about the entertainment value through their repeated personal participation experiences, and (2) consumers infer the expected monetary payoffs on the website by observing the publically available auction ending price information. We estimate the model using a large dataset from an entertainment shopping website. The results show that consumers generally show risk-seeking preferences. They significantly overestimate the entertainment value but underestimate the level of competition at the beginning of their participation, which helps to explain the observed decreasing participation rate over time. Through counterfactual policy simulations, we discuss the website design implications and recommend strategies to create a sustainable business model.

Research Area(s)

  • Bayesian statistics, Consumer learning, Dynamic structural model, E-commerce, Entertainment shopping

Citation Format(s)

An Economic Analysis of Consumer Learning for Online Entertainment Shopping. / Li, Jin; Guo, Zhiling; Tso, Geoffrey K.F.

Pacific Asia Conference on Information Systems, PACIS 2016 - Proceedings. Pacific Asia Conference on Information Systems, 2016.

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)Not applicablepeer-review