Platforms' Search‐Pattern Preference: The Role of Assortment

ABSTRACT Many digital platforms provide a search environment for consumers to evaluate sellers' products. We investigate a strategic platform's preference over two classical search patterns—parallel versus sequential—keeping in check consumers' search behavior (how many products and attributes to evaluate) and sellers' strategies (price and assortment decisions). In the benchmark model with exogenous assortment level, our results show that the platform prefers a 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 by sellers, the platform's preference will be altered qualitatively: The platform prefers a parallel (sequential) pattern when the search cost is large (small), and the analytical predictions are generally consistent with observations in practice. We have identified several novel effects that are built on 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.