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Uncharted Waters: Selling a New Product Robustly
Kun Zhang
https://arxiv.org/abs/2508.04134 https://arxiv.org/pdf/2508.04134…

Uncharted Waters: Selling a New Product Robustly
When introducing a novel product, a seller sets a price and decides how much information to provide to a buyer, who may incur a search cost to discover an outside option. The buyer knows the outside option distribution; the seller knows only its mean and bounds. Seeking "robustness," the seller evaluates strategies based on guaranteed profits, balancing search deterrence against surplus extraction. Providing information can deter search and boost demand but requires offering the buyer a higher …