Research on Information Transmission on Co-innovation Platforms

The failure of a firm's product innovation is mainly due to the mismatch of the product attributes with consumers' preferences. Since consumers' preferences are private, firms try to build some co-innovation platforms so that they can infer consumers' preferences in the process of communicating with consumers on such platforms. This paper models the information transmission process as a signaling game, where a (representative) consumer with two types (N and O) reports his/her preference to a firm via two signals (sn and so). Here, type-N (type-O) indicates that the consumer really likes a innovative (an original) product while signal sn (so) means that the consumer says that he/she likes the innovative (original) product. We identity conditions under which the consumer is willing to truthfully convey his/her preference type to the firm (perhaps via different signals) in the sense of a separate perfect Bayesian equilibriums (PBEs). When the consumer's extra participation utility goes beyond a threshold, the separating equilibrium reveals that type-N (type-O) consumer sends the signal sn (so), no matter how large the reputational loss is. When the reputational loss is low enough, the separating equilibrium reveals that type-N (type-O) consumer sends the signal sn (so), no matter how large the extra utility is. These results reveal the information transmission role of product co-innovation platforms in facilitating the match between product attributes and consumers' preferences and thus reducing the failure possibility of product innovation.