Experience information goods: “Version-to-upgrade”

Nault, Barrie R; Wei, Xueqi (David)

Experience information goods: “Version-to-upgrade”

dc.contributor.author	Nault, Barrie R
dc.contributor.author	Wei, Xueqi (David)
dc.date.accessioned	2015-05-13T20:44:32Z
dc.date.available	2015-05-13T20:44:32Z
dc.date.issued	2013
dc.description	* Elsevier: We are able to post the post print/accepted author manuscript or the pre-print file.(http://www.elsevier.com/journal-authors/author-rights-and-responsibilities#author-posting)Author post print, accepted author manuscript or pre-print file deposited according to publisher's instructions. 05/11/2015.	en_US
dc.description.abstract	In contrast to “search goods” whose true quality can be determined before inspection, we examine information goods that are “experience goods” — goods whose true quality can only be determined through use. We analyze a “version-to-upgrade” strategy where a monopolist generates vertically differentiated versions as bridges that lead consumers to experience the goods so that they can assess their true quality, and then provide upgrades to consumers that initially purchase lower quality versions. Adopting a two-stage model, we find that if consumers have homogeneous expectations about quality before experience, then the version-to-upgrade strategy involves upgrading all the consumers that in the first stage purchased the low quality version. In this way, consumers that upgrade effectively pay a tax for learning. When consumers have heterogeneous expectations about quality before experience, if consumers are pessimistic, then the version-to-upgrade strategy still drives all consumers to upgrade. However, if consumers are optimistic, then, the version-to-upgrade strategy may induce only some of the consumers that initially purchased the low quality version to upgrade. As profits from upgrades increase, the monopolist sets the quality of the low quality version to the lowest quality that can feasibly reveal the true quality, justifying the use of trial or demonstration versions.	en_US
dc.identifier.citation	Wei, X., and B.R. Nault, "Experience Information Goods: "Version-to-Upgrade," Decision Support Systems, 56, 2013, 494-501.	en_US
dc.identifier.doi	http://dx.doi.org/10.11575/PRISM/28797
dc.identifier.uri	http://hdl.handle.net/1880/50426
dc.language.iso	en	en_US
dc.publisher	Elsevier	en_US
dc.publisher.corporate	University of Calgary	en_US
dc.publisher.faculty	Haskayne School of Business	en_US
dc.subject	Information goods	en_US
dc.subject	Experience goods	en_US
dc.subject	Versioning strategies	en_US
dc.subject	Pricing strategies	en_US
dc.title	Experience information goods: “Version-to-upgrade”	en_US
dc.type	journal article
thesis.degree.discipline	Management Information Systems	en_US