Abstract
Consumers check few sites in online purchases. Previous research and experiments we perform demonstrate that consumers can not calculate the optimal strategy for price search. They use heuristics whose performance is better than random and less than optimal. To investigate online price search performance we survey student online textbook purchases. Students achieve good performance because they start with a good strategy and online market organization of marketplace and meta-search sites. An important factor is that algorithms at sites searched perform calculations that reduce the computational complexity of the search.
Similar content being viewed by others
References
Breusch T. S., Pagan A. R. (1979) Simple test for heteroscedasticity and random coefficient variation. Econometrica 47(5): 1287–1294
Halbert W. (1980) A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48(4): 817–838
Johnson E., Moe W., Fader P., Bellman S., Lohse G. (2004) On the depth and dynamics of online search behavior. Management Science 50(3): 299–308
Kogut C. (1990) Consumer search theory and sunk costs. Journal of Economic Behavior and Organization 14: 381–392
Mahnoud E.-G., Grether D. (1995) Are people Bayesian? Uncovering behavioral strategies. Journal of the American Statistical Association 90(432): 1137–1145
McMillan J., Rothschild M. (1994) Search theory. In: Aumann R., Hart S. (eds) Handbook of game theory with economic applications (vol. 2, Chap. 27). North Holland, Amsterdam, pp 905–927
Norman A., Shimer D. (1994) Risk, uncertainty and complexity. Journal of Economic Dynamics and Control 18: 231–249
Norman A., Ahmed A., Chou J., Fortson K., Kurz C., Lee H. et al (2003) An ordering experiment. Journal of Economic Behavior and Organization 50: 249–262
Sonnemans J. (1998) Strategies of search. Journal of Economic Behavior and Organization 35: 309–332
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Norman, A., Berman, J., Brehm, K. et al. Repeated Price Search. Comput Econ 39, 243–257 (2012). https://doi.org/10.1007/s10614-011-9276-9
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10614-011-9276-9