Using a field experiment in collaboration with Yelp across 3,218 businesses in the personal care industry, I empirically explore the value of competitor information on firms’ pricing decisions. I find that competitor information improves firms’ pricing, but even when it is valuable and easily attainable, firms appear to suffer from attentional costs in realizing its value. These findings suggest that inattention may be a key barrier that leads firms to fail to realize gains from even readily accessible data.
Hyunjin Kim is a doctoral candidate in the strategy unit at Harvard Business School. Her research explores how the increasing availability of data in the digital economy shapes firm strategy and the nature of market competition.