Abstract

http://ssrn.com/abstract=1658912
 
 

References (31)



 


 



Inattention to Search Costs in the Gasoline Retail Market: Evidence from a Choice Experiment on Consumer Willingness to Search


Carolina Castilla


Colgate University - Department of Economics

Timothy C. Haab


Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics

July 1, 2010


Abstract:     
We use a choice experiment on gasoline consumers to investigate whether respondents exhibit limited attention to the way different costs enter their search decision. The search cost is a function of the amount of gasoline consumed while driving and the time spent searching for the lowest price. The gasoline used to drive is a disbursement the consumer has made in the past, whereas the time spent searching is a cost that is incurred at the time of search. We randomize the amount of information we provide respondents about search costs in one of 3 ways: (1) time, (2) gasoline spent driving or (3) both. The results indicate that consumers exhibit inattention, leading them to overestimate the cost of the gasoline used while driving, which in turn results in consumers not searching when the expected gains from search exceed the costs, forgoing consumer surplus. The differences in the magnitude of the effect of inattention to time costs, however, can be attributed to cognitive costs of computing the value of the amount of time it takes to drive one mile; it is stronger among consumers that were not reminded of either search cost.

Number of Pages in PDF File: 29

Keywords: Price Search, Choice Experiment, Search Cost, Gasoline Market, Salience, Limited Attention

JEL Classification: D83, D03

working papers series


Download This Paper

Date posted: August 14, 2010 ; Last revised: November 22, 2011

Suggested Citation

Castilla, Carolina and Haab, Timothy C., Inattention to Search Costs in the Gasoline Retail Market: Evidence from a Choice Experiment on Consumer Willingness to Search (July 1, 2010). Available at SSRN: http://ssrn.com/abstract=1658912 or http://dx.doi.org/10.2139/ssrn.1658912

Contact Information

Carolina Castilla (Contact Author)
Colgate University - Department of Economics ( email )
13 Oak Drive
Hamilton, NY 13346
United States
Timothy C. Haab
Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics ( email )
Columbus, OH 43210-1067
United States
Feedback to SSRN


Paper statistics
Abstract Views: 312
Downloads: 46
References:  31

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.234 seconds