Essays on Firms' Strategic Decisions under Consumer Uncertainty

Abstract

Consumers often make decisions under uncertainty, which competing firms have to incorporate into their strategic decisions. My dissertation work aims to provide a better understanding of how consumer uncertainty about products affects firms’ strategic pricing and promotion decisions. In the first essay, I investigate the impact of advertising content on consumer search and purchase when consumers face uncertainty about product fit, how firms’ advertising content strategies are moderated by the degree of competition, and how advertising content design interacts with other elements of the marketing mix. In the second essay, I investigate competitive pricing strategies in the ride-hailing market when users (specifically, drivers and riders) face uncertainty about other users’ platform choices. I demonstrate that users’ inferences about others’ choices based on platform prices can give rise to an array of intricate market outcomes for a competing duopoly. Together, through my streams of research as articulated above, I provide new academic and managerial insights on how firms can think about their competitive strategies when addressing consumer uncertainty.