The Good, The Bad and The Complex: Product Design with Imperfect Information

Open Access       

Authors: Vladimir Asriyan, Dana Foarta and Victoria Vanasco

American Economic Journal: Microeconomics, Vol. 15, No 2, 187–226, May, 2023

We study the joint determination of product quality and complexity. In our model complexity affects how difficult it is for an agent to acquire information about product quality. An agent can accept or reject a product proposed by a designer, who can affect the quality and the complexity of the product. We find that complexity is not a necessary feature of low-quality products. An increase in designer–agent alignment leads to more complex but better-quality products. However, higher product demand or lower competition among designers leads to more complex and lower-quality products. We relate our findings to the existing empirical evidence

This paper originally appeared as Barcelona School of Economics Working Paper 1079