Competitive Information Design in Sequential Search

2026-06-02

AI Summary

This study investigates how multiple horizontally differentiated advertisers strategically disclose information to compete for consumer attention and purchase decisions when consumers face inspection costs and conduct sequential search according to the Weitzman rule. The paper develops the first theoretical framework extending single-sender information design to a competitive multi-sender setting. It establishes the existence of equilibrium under non-atomic priors and fully characterizes the structure of symmetric equilibria—and their underlying economic intuition—under the assumption of monotone likelihood ratios. Employing tools from Bayesian games and duality theory, the analysis verifies senders’ optimal responses and elucidates equilibrium properties, revealing the intricate strategic patterns of information design that emerge in competitive environments.

Abstract

Advertisements often strategically disclose information to consumers who make decisions on further information acquisition and eventual purchase. Anderson and Renault (2006) model this problem using an information design framework, where the advertiser acts as a sender and the consumer as a receiver. We extend this model to a competitive setting with horizontally differentiated senders competing for a unit-demand receiver. Under costly inspection, the receiver's optimal sequential search action is given by Weitzman's Index Algorithm. We give a method, based on duality arguments, to verify whether a sender's given information strategy constitutes a best response against his competitors (other senders). We establish the existence of an equilibrium in the game among senders when the prior distributions have no mass; we also illustrate that such equilibria may exhibit intricate behaviors. Finally, we meticulously characterize symmetric equilibria played by the senders for cases when the prior distributions have monotone increasing densities, while offering economic intuitions behind the insightful equilibrium structure.

Problem

• Competitive Information Design
• Sequential Search
• Information Disclosure
• Horizontal Differentiation
• Bayesian Persuasion

Innovation

• competitive information design
• sequential search
• Weitzman's Index Algorithm
• duality arguments
• symmetric equilibrium