The Power of Commitment in Group Search

In this paper, we build a two-member, two-period model to show that, when a group of people with different preferences conducts a search and makes a decision using the majority voting rule, they can benefit from making a commitment on the number of products to search ex ante (i.e., conducting a fixed-sample search) when the search cost is small enough or relatively large. The underlying mechanism is that, because of the preference inconsistency between group members, they tend to search fewer products and, thus, have lower expected utility in group search than in single-agent search, and making a commitment on the number of products to search helps mitigate the preference inconsistency problem in group search, especially when the search cost is small enough or relatively large. We further show that, under alternative voting rules, there also exist ranges of search cost in which fixed-sample search works better than sequential search as long as the voting rule is exogenously determined. If the group can endogenously choose the voting rule that maximizes their expected utility, then sequential search is always preferable to fixed-sample search. We also consider several extensions to show the robustness of our finding.

History: Ganesh Iyer served as the senior editor.

Funding: This work was supported by National University of Singapore [Grant WBS A-8000489-00-00].

Supplemental Material: The online appendix is available at https://doi.org/10.1287/mksc.2023.1447.