Prior Information and Consumer Search: Evidence from Eye-tracking

56 Pages Posted: 23 Dec 2020 Last revised: 1 Mar 2021

See all articles by Raluca Ursu

Raluca Ursu

New York University - Stern School of Business

Qianyun Poppy Zhang

New York University (NYU) - New York University (NYU), Leonard N. Stern School of Business, Department of Marketing, Students

Tulin Erdem

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Marketing

Date Written: February 26, 2021

Abstract

This paper develops a search model in which both the information obtained during the search process and the information possessed by consumers prior to search influence their choices. We estimate our model on a data set from an experiment that has two novel features: (i) it contains information on consumers’ prior brand ownership, familiarity with each brand, and prior experience using different product features; and (ii) it uses eye-tracking methods to capture search behavior during the experiment. Using these data we show consumers are generally more likely to search and buy brands they own and are familiar with, highlighting the importance of their prior information. We then quantify the impact of prior information on consumer choices, as well as document the estimation bias arising when brand prior information is absent from the model. Finally, through a series of counterfactuals, we explore the managerial value of using consumers’ brand priors to construct personalized ranking-based recommendation systems.

Keywords: consumer search, search with learning, prior uncertainty, eye-tracking, recommendation systems

Suggested Citation

Ursu, Raluca and Zhang, Qianyun Poppy and Erdem, Tulin, Prior Information and Consumer Search: Evidence from Eye-tracking (February 26, 2021). NYU Stern School of Business Forthcoming, Available at SSRN: https://ssrn.com/abstract=3717885 or http://dx.doi.org/10.2139/ssrn.3717885

Raluca Ursu

New York University - Stern School of Business ( email )

Tisch Hall
40 W 4 St.
New York, NY NA 10012
United States

Qianyun Poppy Zhang (Contact Author)

New York University (NYU) - New York University (NYU), Leonard N. Stern School of Business, Department of Marketing, Students ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States

Tulin Erdem

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States

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