Parallel or Sequential? Platforms' Search-Pattern Preference: The Role of Assortment

Abstract

Problem Definition: Many digital platforms provide a search environment for consumers to evaluate sellers' products. We investigate a strategic platform's preference in search pattern (parallel pattern or sequential pattern) to keep in check consumers' search behavior and sellers' price and assortment reactions. Academic/Practical Relevance: Although both parallel and sequential patterns are prevalent in the online shopping environment, few studies have considered the platform's preferences in these search patterns, and implications in relevant operations management problems---sellers' assortment decisions in our paper. Methodology: We use the multinomial logit choice model to analytically explore the platform's preference in search pattern in anticipation that a specific pattern will affect the interactions between consumers and sellers. Consumers optimally choose the number of sellers to visit and the amount of product attributes to evaluate, and sellers optimally choose their prices and assortment levels, with all decisions being affected by which pattern the platform selects. Results: In our benchmark model with exogenous assortment level, our results show that the platform prefers parallel (sequential) pattern when the search cost is small (large) or when the assortment level is high (low). However, when the assortment level is a decision, the platform's preference will be altered qualitatively; that is, the platform prefers parallel (sequential) pattern when the search cost is large (small). We have identified several novel effects that are built off the fundamental difference between parallel and sequential patterns and use them to explain the platform's search-pattern preference. Interestingly, our paper shows that the platform can strategically use operational means (assortment prevention effect) and marketing means (pricing prevention effect) to manipulate consumers' search to maximize its profit. Managerial Implications: Our analytical predictions are consistent with several interesting observations in practice and shed some light on how a strategic platform designs its search environment and monetizes assortment management service.