Testing Models of Consumer Search using Data on Web Browsing and Purchasing Behavior
Forthcoming in the American Economic Review
32 Pages Posted: 8 Oct 2009 Last revised: 5 Aug 2014
Date Written: September 30, 2009
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.
Keywords: consumer search, electronic commerce, consumer behavior
JEL Classification: D43, D83, L13
Suggested Citation: Suggested Citation