Impact of Consumer Curiosity on Content Disclosure and Pricing
2021
Drawing on the literature on curiosity, we develop a model to study the impact of consumer curiosity on a firm's information disclosure of product content and price in an entertainment market, where consumers are curious about new products (e.g., movies) and are uncertain about their quality. We show that when consumers exhibit a weak curiosity preference, a high-quality firm's information disclosure level and price can be different from those of a low-quality firm. In contrast, when consumers exhibit a strong curiosity preference, the firm always discloses the same limited level of content information and sets identical prices regardless of the quality of its products, rendering it difficult for potential consumers to identify the quality of the products. These results suggest that consumer curiosity may account for the widespread phenomenon of the coexistence of similarly limited content disclosure and uniform pricing in entertainment markets.
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