Testing Models of Consumer Search using Data on Web Browsing and Purchasing Behavior

Forthcoming in the American Economic Review

NET Institute Working Paper No. 09-23

32 Pages Posted: 8 Oct 2009 Last revised: 5 Aug 2014

See all articles by Babur De los Santos

Babur De los Santos

Clemson University

Ali Hortacsu

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Matthijs R. Wildenbeest

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Date Written: September 30, 2009

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.

Keywords: consumer search, electronic commerce, consumer behavior

JEL Classification: D43, D83, L13

Suggested Citation

De los Santos, Babur and Hortacsu, Ali and Wildenbeest, Matthijs R., Testing Models of Consumer Search using Data on Web Browsing and Purchasing Behavior (September 30, 2009). Forthcoming in the American Economic Review , NET Institute Working Paper No. 09-23, Available at SSRN: https://ssrn.com/abstract=1483380 or http://dx.doi.org/10.2139/ssrn.1483380

Babur De los Santos (Contact Author)

Clemson University ( email )

228 Sirrine Hall
Clemson, SC 29634
United States
864-656-3953 (Phone)

HOME PAGE: http://babur.people.clemson.edu

Ali Hortacsu

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States
773-702-5841 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Matthijs R. Wildenbeest

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-856-5067 (Phone)
812-855-3354 (Fax)

HOME PAGE: http://www.kelley.iu.edu/mwildenb

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