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Buying Online: Sequential Decision Making by Shopbot Visitors

Author

Listed:
  • 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)

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.

Suggested Citation

  • Dulleck, Uwe & Hackl, Franz & Weiss, Bernhard & Winter-Ebmer, Rudolf, 2008. "Buying Online: Sequential Decision Making by Shopbot Visitors," Economics Series 225, Institute for Advanced Studies.
  • Handle: RePEc:ihs:ihsesp:225
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    File URL: http://www.ihs.ac.at/publications/eco/es-225.pdf
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    References listed on IDEAS

    as
    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.
    2. Michael Yee & Ely Dahan & John R. Hauser & James Orlin, 2007. "Greedoid-Based Noncompensatory Inference," Marketing Science, INFORMS, vol. 26(4), pages 532-549, 07-08.
    3. Michael D. Smith & Erik Brynjolfsson, 2001. "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," NBER Chapters,in: E-commerce, pages 541-558 National Bureau of Economic Research, Inc.
    4. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    5. Mandler, Michael & Manzini, Paola & Mariotti, Marco, 2012. "A million answers to twenty questions: Choosing by checklist," Journal of Economic Theory, Elsevier, vol. 147(1), pages 71-92.
    6. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
    7. 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.
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    Cited by:

    1. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Y. Ozbay, 2012. "Revealed Attention," American Economic Review, American Economic Association, vol. 102(5), pages 2183-2205, August.

    More about this item

    Keywords

    E-commerce; price comparison; decision theory; heuristics; seller reputation;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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