Consumer Decision-Making at an Internet Shopbot
Michael D. Smith
Carnegie Mellon University - H. John Heinz III School of Public Policy and Management
Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)
MIT Sloan School of Management Working Paper No. 4206-01
Internet shopbots compare prices and service levels at competing retailers, creating a laboratory for analyzing consumer choice. We analyze 20,268 shopbot consumers who select various books from 33 retailers over 69 days for a total of 1,512,856 observed offers. Although each retailer offers a homogeneous product, we find that brand is an important determinant of consumer choice. Consumers use brand as a proxy for retailer credibility in non-contractible aspects of the product and service bundle, such as shipping reliability. Our results also suggest that consumers are sensitive to how total price is allocated between the item price, shipping price, and tax.
Number of Pages in PDF File: 33
Date posted: November 19, 2001