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Buying Online: Sequential Decision Making by Shopbot Visitors

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Author Info
Dulleck, Uwe (School of Economics and Finance, Queensland University of Technology, Brisbane, Australia)
Hackl, Franz (Department of Economics, University of Linz, Linz, Austria)
Weiss, Bernhard (Department of Economics, University of Linz, Linz, Austria)
Winter-Ebmer, Rudolf (Department of Economics, University of Linz, Linz, Austria, and Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)

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Abstract

In this article we propose a two stage procedure to model demand decisions by customers who are balancing several dimensions of a product. We then test our procedure by analyzing the behavior of buyers from an Austrian price comparison site. Although in such a market a consumer will typically search for the cheapest price for a given product, reliability and service of the supplier are other important characteristics of a retailer. In our data, consumers follow such a two stage procedure: they select a shortlist of suppliers by using the price variable only; finally, they trade off reliability and price among these shortlisted suppliers.

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File URL: http://www.ihs.ac.at/publications/eco/es-225.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by Institute for Advanced Studies in its series Economics Series with number 225.

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Length: 24 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:ihs:ihsesp:225

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Related research
Keywords: E-commerce; price comparison; decision theory; heuristics; seller reputation;

Other versions of this item:

Find related papers by JEL classification:
L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Betancourt, Roger R. & Gautschi, David, 1993. "Two essential characteristics of retail markets and their economic consequences," Journal of Economic Behavior & Organization, Elsevier, vol. 21(3), pages 277-294, August. [Downloadable!] (restricted)
  2. Smith, Michael D & Brynjolfsson, Erik, 2001. "Consumer Decision-Making at an Internet Shopbot: Brand Still Matters," Journal of Industrial Economics, Blackwell Publishing, vol. 49(4), pages 541-58, December. [Downloadable!] (restricted)
  3. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December. [Downloadable!]
  4. Eliaz, Kfir & Ok, Efe A., 2006. "Indifference or indecisiveness? Choice-theoretic foundations of incomplete preferences," Games and Economic Behavior, Elsevier, vol. 56(1), pages 61-86, July. [Downloadable!] (restricted)
  5. Mandler, Michael & Manzini, Paola & Mariotti, Marco, 2008. "A Million Answers to Twenty Questions: Choosing by Checklist," IZA Discussion Papers 3377, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Michael Smith & Erik Brynjolfsson, 1999. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Computing in Economics and Finance 1999 1022, Society for Computational Economics.
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