| By: |
Babur De los Santos (Department of Business Economics and Public Policy, Indiana University Kelley School of Business);
Ali Hortacsu (University of Chicago and NBER);
Matthijs R. Wildenbeest (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) |
| Abstract: |
Using a large data set on web browsing and purchasing behavior we test to what
extent consumers are searching in accordance to various classical search
models. We nd that the benchmark model of sequential search with a known
distributions of prices can be rejected based on the recall patterns we
observe in the data. Moreover, we show that even if consumers are initially
unaware of the price distribution and have to learn the price distribution,
observed search behavior for given consumers over time is more consistent with
non-sequential search than sequential search with learning. Our ndings suggest
non-sequential search provides a more accurate description of observed
consumer search behavior. We then utilize the non-sequential search model to
estimate the price elasticities and markups of online book retailers. |
| Keywords: |
consumer search, electronic commerce, consumer behavior |
| JEL: |
D43 D83 L13 |
| Date: |
2009–04 |
| URL: |
http://d.repec.org/n?u=RePEc:iuk:wpaper:2009-05&r=ict |