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Consumer search on the internet Babur de los Santos

This paper explores consumer search behavior on the internet for the best price on books. It examines data on individual search lengths and purchases to estimate search costs and investigate consumer heterogeneity in search activity.

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Consumer search on the internet Babur de los Santos

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  1. Consumer search on the internetBabur de los Santos Discussion by Sergei Koulayev NET conference, 2009

  2. This paper’s highlights: • Estimating search for the best price: books • Data on individual search lengths and purchases of books • Key idea: using seller’s market shares to estimate heterogeneous sampling probabilities • Identification of search cost distribution without equilibrium assumptions • Investigation of consumer heterogeneity in search activity

  3. Main findings: • Search activity is limited on a small number of retailers: 15 bookstores out of 230 capture 98% of all website visits • Non-parametric estimates of search costs: on average, from $0.9 to $1.8 per search • Heterogeneity in search costs: retired and lower educated consumers search more, while people with higher income search less

  4. Comments / suggestions: • Making better use of panel data on search histories: • Consumer types based on their search intensity • A model of sequential search with learning: an alternative way to explain the significant return activity • Beyond unequal sampling probabilities: a formation of “consideration set” of retailers • Again, panel data can help: some consumers can learn about pricing strategies of various sellers • Non-price characteristics of sellers: ease of use, popularity, prior experience

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