Selective Bargain Hunting. A Concise Test of Rational Consumer Search

50 Pages Posted: 7 Mar 2019

See all articles by Chloe Lee

Chloe Lee

Federal Reserve Banks - Federal Reserve Bank of Boston

Wen Long

Barclays Capital

María José Luengo‐Prado

Federal Reserve Banks - Federal Reserve Bank of Boston

Bent E. Sørensen

University of Houston - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: January 27, 2019

Abstract

A model of the allocation of time between work, leisure, and price-search for different goods predicts that consumers spend relatively more time searching for better prices of goods of which they consume relatively more. Using scanner data, we confirm empirically that consumers pay lower (higher) prices for goods that they buy more (less) of than other consumers.

Keywords: Consumption; Consumer Search; Time Use

JEL Classification: E21, D12

Suggested Citation

Lee, Chloe and Long, Wen and Luengo-Prado, Maria Jose and Sorensen, Bent E., Selective Bargain Hunting. A Concise Test of Rational Consumer Search (January 27, 2019). Available at SSRN: https://ssrn.com/abstract=3335872 or http://dx.doi.org/10.2139/ssrn.3335872

Chloe Lee

Federal Reserve Banks - Federal Reserve Bank of Boston

Wen Long

Barclays Capital ( email )

745 7th Ave
New York, NY New York 10019
United States

Maria Jose Luengo-Prado (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Bent E. Sorensen

University of Houston - Department of Economics ( email )

204 McElhinney Hall
Houston, TX 77204-5882
United States
713-743-3841 (Phone)
713-743-3798 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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