Relating Inertia and Experience in Technology Markets: An Analysis of Households' Personal Computer Choices

Abstract:     
This paper empirically analyzes how households’ PC purchasing behaviors change with market experience. We find that: households generally exhibit inertia in their PC purchases, the level of inertia is increasing as a function of experience on the PC market, and, for households switching brands, the likelihood of buying a lesser-known brand increases with experience, regardless of the brand of the previous purchase. These findings are consistent with the predictions of a simple learning model, and extend our understanding of how market experience affects purchasing behavior to an important technology product, with implications that may apply to other similar products.

Number of Pages in PDF File: 39

Keywords: Technology good, personal computer, inertia, market evolution, brand choice, true vs. spurious state dependence, durable good, consumer learning

JEL Classification: D12, L63, L11

working papers series