Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior
Babur De Los Santos, Ali Hortaçsu, Matthijs R. Wildenbeest
American Economic Review · 2012 · Volume 102 · Issue 6
Abstract
Using a large dataset on web browsing and purchasing behavior we test to what extent consumers are searching in accordance to various search models. We find that the benchmark model of sequential search with a known price distribution can be rejected based on recall patterns found in the data as well as the absence of dependence of search decisions on prices. Our findings suggest fixed sample size search provides a more accurate description of search behavior. We then utilize the fixed sample size search model to estimate demand elasticities of online bookstores in an environment where store preferences are heterogeneous. (JEL D12, D83, L81)
Keywords
Consumer Economics: Empirical Analysis, Search, Learning, Information and Knowledge, Communication, Belief, Retail and Wholesale Trade, e-Commerce
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