Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior

Testing Models of Consumer Search Using Data on Web Browsing and

Purchasing Behavior

(Dr. Babur De Los Santos with Ali Hortaçsu and Matthijs R. Wildenbeest, American Economic Review, 102(6):

2955–80, 2012.)

 

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.

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