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Testing Models of Consumer Search Using Data on Web Browsing Behavior

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Author Info
Babur De los Santos () (Kelley School of Business, Indiana University)
Ali Hortacsu () (University of Chicago)
Matthijs R. Wildenbeest () (Kelley School of Business, Indiana University)

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Abstract

Using a large data set on consumers' web browsing and purchasing behavior we contrast various classical search models. We find 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 findings 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.

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File URL: http://www.netinst.org/DelosSantos_Hortacsu_Wildenbeest_09-23.pdf
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Publisher Info
Paper provided by NET Institute in its series Working Papers with number 09-23.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 34 pages
Date of creation: Aug 2009
Date of revision: Aug 2009
Handle: RePEc:net:wpaper:0923

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Web page: http://www.NETinst.org/

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Related research
Keywords: search costs; sequential search; fixed-sample search; non-sequential search; online browsing; online book industry; consumer search;

Find related papers by JEL classification:
L80 - Industrial Organization - - Industry Studies: Services - - - General
L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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This page was last updated on 2009-11-20.


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