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Risk Attitudes and Internet Search Engines: Theory and Experimental Evidence

  • Aurora García-Gallego

    ()

    (Universitat Jaume I (Castellón, Spain))

  • Nikolaos Georgantzís

    ()

    (Universitat Jaume I (Castellón, Spain))

  • Pedro Pereira

    ()

    (Autoridade da Concorrência (Portugal))

  • José C. Pernías-Cerrillo

    ()

    (Universitat Jaume I (Castellón, Spain))

This paper analyzes the impact on consumer prices of the size and biases of price comparison search engines. We develop several theoretical predictions, in the context of a model related to Burdett and Judd (1983) and Varian (1980), and test them experimentally. The data supports the model’s predictions regarding the impact of the number of firms, and the type of bias of the search engine. The data does not support the model’s predictions regarding the impact of the size of the search engine. We identified several data patterns, and developed an econometric model for the price distributions. Variables accounting for risk attitudes improved significantly the explanatory power of the econometric model.

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File URL: http://www.netinst.org/Pereira.pdf
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Paper provided by NET Institute in its series Working Papers with number 04-03.

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Length: 56 pages
Date of creation: Oct 2004
Date of revision: Oct 2004
Handle: RePEc:net:wpaper:0403
Contact details of provider: Web page: http://www.NETinst.org/

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  1. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
  2. Timothy N. Cason & Daniel Friedman, 2000. "Buyer Search and Price Dispersion: A Laboratory Study," Econometric Society World Congress 2000 Contributed Papers 1549, Econometric Society.
  3. Pereira, Pedro, 2005. "Do lower search costs reduce prices and price dispersion?," Information Economics and Policy, Elsevier, vol. 17(1), pages 61-72, January.
  4. White, Halbert, 1982. "Maximum Likelihood Estimation of Misspecified Models," Econometrica, Econometric Society, vol. 50(1), pages 1-25, January.
  5. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
  6. Baye, Michael R. & Kovenock, Dan & de Vries, Casper G., 1992. "It takes two to tango: Equilibria in a model of sales," Games and Economic Behavior, Elsevier, vol. 4(4), pages 493-510, October.
  7. Rosenthal, Robert W, 1980. "A Model in Which an Increase in the Number of Sellers Leads to a Higher Price," Econometrica, Econometric Society, vol. 48(6), pages 1575-79, September.
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