I study pricing and product design choices of multiproduct firms in a model of directed search. Product design introduces vertical differentiation à la Gabszewicz and Thisse (1979) as well as Shaked and Sutton (1982). While all consumers have a preference for a more niche product design, consumers with lower search costs benefit relatively more. Firms gain from dispersion in tastes through product design and choose maximum differentiation in equilibrium. The firm with the broader product design sets a lower price and attracts consumers with high search costs.

This study investigates the influence of gender composition on allocation decisions involving a rank–inequality tradeoff. In a laboratory experiment, participants chose to either alleviate inequality by relinquishing their current relative rank or exacerbate inequality while maintaining their current rank. Two essential features of the experiment are: 1) participants’ relative rank is the outcome of their real-effort performance and luck; 2) participants’ genders are naturally revealed by gender-specific nicknames. We found that female participants are more reluctant to relinquish their current relative rank when the persons ranked below and above them are of the opposite gender. This tendency was less pronounced in the male participants.