Buying Online: Sequential Decision Making by Shopbot Visitors
28 Pages Posted: 2 Dec 2008
Date Written: August 2008
In this article we propose a two stage procedure to model demand decisions by customers who are balancing several dimensions of a product. We then test our procedure by analyzing the behavior of buyers from an Austrian price comparison site. Although in such a market a consumer will typically search for the cheapest price for a given product, reliability and service of the supplier are other important characteristics of a retailer. In our data, consumers follow such a two stage procedure: they select a shortlist of suppliers by using the price variable only; finally, they trade off reliability and price among these shortlisted suppliers.
Keywords: decision theory, e-commerce, heuristics, price comparison, seller reputation
JEL Classification: D83, L81
Suggested Citation: Suggested Citation