Testing Models of Consumer Search using Data on Web Browsing and Purchasing Behavior

Babur I. De los Santos (), Ali Hortacsu and Matthijs R. Wildenbeest ()
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Ali Hortacsu: University of Chicago and NBER

No 2009-05, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

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 (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ict, nep-lab, nep-mic and nep-mkt
Date: 2009-04
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