Shuffling as a Sales Tactic: An Experimental Study of Selling Product Rankings

63 Pages Posted: 19 Mar 2021 Last revised: 27 Nov 2023

See all articles by Qichao Shi

Qichao Shi

Southwestern University of Finance and Economics

James A. Dearden

Lehigh University

Ernest Lai

Lehigh University - Department of Economics

Date Written: November 20, 2023

Abstract

We investigate the strategic interaction between a product expert and a consumer. The expert publicly chooses a ranking methodology to rank two products with uncertain relative merits; the consumer decides whether to acquire the ranking report to guide her product choice. The expert cares only about selling the report; the consumer derives utility from the product itself and an extra ranking attribute controlled by the expert. Strategic shuffling, in which the expert induces demand for his report by manipulating the uncertainty in product rankings, using a methodology that sometimes ranks the inferior product first, emerges as an equilibrium phenomenon. When the consumer places high value on the top-ranked product, the unique expert-optimal equilibrium, which features shuffling, diverges from the consumer-optimal equilibrium. Laboratory evidence supports the predictions of the expert-optimal equilibrium. With limited field data due to proprietary ranking methodologies, our study provides useful alternative evidence on how ranking publishers may adopt methodologies that are not in consumers' best interests.

Keywords: Expert Advice; Product Ranking; Product Guidance; Ranking Uncertainty; Laboratory Experiment

JEL Classification: C72; C92; D82; D83; L15

Suggested Citation

Shi, Qichao and Dearden, James A. and Lai, Ernest, Shuffling as a Sales Tactic: An Experimental Study of Selling Product Rankings (November 20, 2023). Available at SSRN: https://ssrn.com/abstract=3785136 or http://dx.doi.org/10.2139/ssrn.3785136

Qichao Shi (Contact Author)

Southwestern University of Finance and Economics ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

James A. Dearden

Lehigh University ( email )

621 Taylor Street
Department of Economics
Bethlehem, PA 18015
United States

Ernest Lai

Lehigh University - Department of Economics ( email )

620 Taylor Street
Bethlehem, PA 18015
United States

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