Product Bundling – The Effects of Quality Uncertainty and Complementarities on Individual Judgment and Choice

Product bundling of products is prevalent in markets for information goods on the Internet, computer hardware and software goods. Individuals’ judgment and choice of IT product bundles have crucial effects on consumer demand of bundles and market conduct by firms. However, factors affecting consumers’ judgment and choice of IT product bundles, and the resultant impacts have not been clearly documented in the IS literature. In particular, research in product bundling has not examined the effect of product quality uncertainty (in both the focal and supplement components) and the impact of including either complementary or non-complementary components in a bundle. We pose these research questions: 1) Do individuals’ judgment and choice of product bundles depend on whether the focal or supplement bundle item is complementary or non-complementary to each other? 2) Do individuals’ judgment and choice of product bundles depend on the presence of product quality uncertainty in either the focal or supplement bundle component? Drawing from various research streams, we formulate hypotheses to evaluate the answers to our research questions. To test these hypotheses, we conduct laboratory experiments to study individual judgments and choices of IT product bundles. Research on the aboveproposed issues has important implications for practice and research in IT product and brand extensions, and the bundling of digital information products.