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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, 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 an a priori known distribution of prices can be rejected based on both the recall patterns we observe in the data as well as the absence of dependence of search decisions on observed prices. Our findings suggest that fixed sample size search provides a more accurate description of observed consumer search behavior. We then utilize the fixed sample size search model to estimate demand elasticities of online book stores in an environment where consumers' store preferences are heterogeneous.

Citation

De los Santos, Babur, Ali Hortaçsu, and Matthijs R. Wildenbeestj (2012), "Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior," American Economic Review, Vol. 102, No. 6, pp. 2955-2980. 

Keywords

consumer search, electronic commerce, consumer behavior