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Indiana University Bloomington

BEPP

The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and Publications

Journal Articles

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

2012, forthcoming American Economic Review

Babur De los Santos, Ali Hortaçsu, Matthijs R. Wildenbeest

Abstract

Using a large data set on web browsing and purchasing behavior we test to what extent consumers are searching in accordance to various classical search models. We find that the benchmark model of sequential search with a known distributions of prices can be rejected based on the recall patterns we observe in the data. Moreover, we show that even if consumers are initially unaware of the price distribution and have to learn the price distribution, observed search behavior for given consumers over time is more consistent with non-sequential search than sequential search with earning. Our findings suggest non-sequential search provides a more accurate description of observed consumer search behavior. We then utilize the non-sequential search model to estimate the price elasticities and markups of online book retailers.

Citation

Wildenbeest, Matthijs, Babur De los Santos, and Ali Hortacsu (2012), "Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior." forthcoming, American Economic Review.

Keywords

consumer search, electronic commerce, consumer behavior