American Economic Review Vol. 102 No. 6 2012

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

Babur De los Santos¹; Ali Hortaçsu²; Matthijs R. Wildenbeest¹

¹ Kelley School of Business, Indiana University, 1309 E. Tenth St., Bloomington, IN 47405. · ² Department of Economics, University of Chicago, 1126 E. 59th St., Chicago, IL 60637.

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.

DOI

10.1257/aer.102.6.2955

Volume

102

Issue

6

Pages

2955-2980

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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