Fan Zhang

Research

Publication

A Method to Estimate Discrete Choice Models that is Robust to Consumer Search 

with Jason Abaluck and Giovanni Compiani, forthcoming at the Journal of Political Economy

Abstract: We state conditions under which choice data suffices to identify preferences when consumers may not be fully informed about the attributes of goods. Our approach can be used to test for full information, to forecast how consumers will respond to information, and to conduct welfare analysis when consumers are imperfectly informed. In a lab experiment, we successfully forecast the response to new information when consumers engage in costly search. In data from Expedia, our method identifies which attribute was not immediately visible to consumers in search results, and we then use the model to compute the value of additional information.

Working Paper

Variety Seeking in High-Frequency Consumption: Implications for Targeted Marketing

with Carol Hengheng Lu and Zhijie Lin

Abstract: This paper studies consumers' variety-seeking preferences and their implications for targeted marketing on a food delivery platform. Our analysis reveals that a substantial fraction of consumers exhibit variety-seeking preferences, with an average consumer willing to pay 23.1%  less to reorder from the same seller they purchased from in the previous period. Through counterfactual analysis, we find that optimizing rankings to account for variety-seeking preferences can enhance revenue, consumer welfare, and purchase probability. Furthermore, we find that the optimal targeted pricing strategy involves a general price increase with a discount for recent consumers, and consumers' variety-seeking preferences soften price competition.

Work in Progress

Learning Through Ratings Under Endogenous Product Quality

with Przemyslaw Jeziorski