You Can Lead a Horse to Water: Spatial Learning and Path Dependence in Consumer Search
Charles Hodgson, Gregory Lewis
Econometrica · 2025 · Volume 93 · Issue 4
Abstract
We develop and estimate a model of consumer search with spatial learning. Consumers make inferences from previously searched objects to unsearched objects that are nearby in attribute space, generating path dependence in search sequences. The estimated model rationalizes patterns in data on online consumer search paths: search tends to converge to the chosen product in attribute space, and consumers take larger steps away from rarely purchased products. Eliminating spatial learning reduces consumer welfare by 12%: cross-product inferences allow consumers to locate better products in a shorter time. Spatial learning has important implications for product recommendations on retail platforms. We show that consumer welfare can be reduced by unrepresentative product recommendations and that consumer-optimal product recommendations depend on both consumer learning and competition between platforms.
Keywords
Consumer search, Bayesian learning, spatial learning, online platforms, recommendation systems, path dependence, Gaussian processes, approximate dynamic programming, neural networks
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