Tom Wiseman’s scientific contributions

In many differentiated good markets like music, books, and movies, the choice set of available products is overwhelmingly large and growing as new products flow into the market each month. Consumers are not aware or poorly informed about many of the available products. They learn about the products and their preferences for them from the purchasing decisions of other consumers and through costly search. We use a variant of the sequential search models of Banerjee [2], Bikhchandani, Hirshleifer, and Welch [5] and Smith and Sorensen [16] to study market demand in these kinds of markets. The option to search prior to purchase leads to different dynamics and outcomes than the standard herding models. The results explain both the unpredictability of sales conditional on quality and the inequality of sales across products. The model also yields testable predictions regarding the impact of product quality, search costs, and price on the likelihood of a high-quality product ending up with low sales (i.e., a "bad" herd). We validate the model using data from an experimental study by Salganik, Dodds, and Watts [13].