Consumer online search with partially revealed information

Chris Gu and Yike Wang

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Modern-day search platforms generally have two layers of information presentation. The outer layer displays the collection of search results with attributes selected by platforms, and consumers click on a product to reveal all its attributes in the inner layer. The information revealed in the outer layer affects the search costs and the probability of finding a match. To address the managerial question of optimal information layout, we create an information complexity measure of the outer layer, namely orderedness entropy, and study the consumer search process for information at the expense of time and cognitive costs. We first conduct online random experiments to show that consumers respond to and actively reduce cognitive cost for which our information complexity measure provides a representation. Then, using a unique and rich panel tracking consumer search behaviors at a large online travel agency (OTA), we specify a novel sequential search model that jointly describes the refinement search and product clicking decisions. We find that cognitive cost is a major component of search cost, while loading time cost has a much smaller share. By varying the information revealed in the outer layer, we propose information layouts that Pareto-improve both revenue and consumer welfare for our OTA.This paper was accepted by Juanjuan Zhang, marketing.

Keywords: online consumer research; cognitive modeling; information complexity; search intermediaries; platform design; online consumer search (search for similar items in EconPapers)
JEL-codes: L81 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2022-06-01
New Economics Papers: this item is included in nep-ore and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Management Science, 1, June, 2022, 68(6), pp. 4215 - 4235. ISSN: 0025-1909

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