Simultaneous or Sequential? Search Strategies in the U.S. Auto Insurance Industry

Honka, Elisabeth

doi:10.2139/ssrn.2345449

Cited by 49 publications

(64 citation statements)

References 47 publications

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“…Examples of the former include Allenby and Ginter (), Siddarth, Bucklin, and Morrison (), Chiang, Chib, and Narasimhan (), Zhang (), Van Nierop et al. (), whereas examples of the latter include Mehta, Rajiv, and Srinivasan (), Kim, Albuquerque, and Bronnenberg (), Honka (), Moraga‐González, Sándor, and Wildenbeest (), Honka and Chintagunta (). The latter set of articles is also part of a growing body of literature on consumer search.…”

Section: Related Literaturementioning

confidence: 99%

“…We use the approach developed by Honka and Chintagunta () to identify the search method (simultaneous versus sequential) consumers use . We find the proportion of above‐expectation actual interest rates in consumers' consideration sets to be around 50% and constant across different consideration set sizes.…”

Section: Modelmentioning

confidence: 99%

“…Honka and Chintagunta () prove analytically that the proportion of below‐price expectation actual prices among consumers searching once equals (is larger than) the probability of getting a below‐price expectation actual price draw under simultaneous (sequential) search.…”

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confidence: 99%

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Advertising, consumer awareness, and choice: evidence from the U.S. banking industry

Honka

Hortaçsu

Vitorino

2017

The RAND J of Economics

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128

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How does advertising influence consumer decisions and market outcomes? We utilize detailed data on consumer shopping behavior and choices over bank accounts to investigate the effects of advertising on the different stages of the shopping process: awareness, consideration, and choice. We formulate a structural model with costly search and endogenous consideration sets, and show that advertising in the U.S. banking industry is primarily a shifter of awareness as opposed to consideration or choice. Advertising makes consumers aware of more options, search more, and find better alternatives. This increases the market share of smaller banks and makes the industry more competitive.

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Section: Related Literaturementioning

confidence: 99%

Section: Modelmentioning

confidence: 99%

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Advertising, consumer awareness, and choice: evidence from the U.S. banking industry

Honka

Hortaçsu

Vitorino

2017

The RAND J of Economics

Self Cite

128

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“…Yet some researchers offer empirical evidence in support of both sequential (Zhang et al 2012) and nonsequential (De los Santos et al 2012, Honka andChintagunta 2014) search, whereas others propose an optimal sequential process (Kim et al 2010). In this tradition, our two-stage search model represents a modified version of the standard sequential search framework.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Sequential search is a better strategy than nonsequential search, as long as users are not too impatient in getting results Honka and Chintagunta (2014). test the two search models based on the prices of the searched options in a buyers' consideration set, and find evidence supporting nonsequential search De los Santos et al (2012).…”

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confidence: 99%

Consumer Search Activities and the Value of Ad Positions in Sponsored Search Advertising

Chan

Park

2015

Marketing Science

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C onsumer search activities can be endogenously determined by the ad positions in sponsored search advertising. We model how advertisers compete for ad positions in sponsored listings and, conditional on the list of sponsored ads, how online consumers search for information and make purchase decisions. On the consumer side, assuming that users browse information from top to bottom and adopt a sequential search strategy, we develop a two-stage model of consumer search (whether to click and whether to stop the search) that extends the standard sequential search framework in economics literature. On the advertiser side, it is very difficult to fully specify the optimal strategies of advertisers because the equilibrium outcome depends on variables that researchers do not observe. As we have an incomplete model of advertiser competition, we propose using the necessary condition that, at equilibrium, no advertiser will find another available ad position more valuable than the one it has chosen. Using a data set obtained from a search engine, we find that consumers can be classified into two segments that exhibit distinct search behaviors. For advertisers, the value of search advertising comes primarily from terminal clicks, which represent the last link (including organic results) clicked by an online user. We also demonstrate that the value of ad positions depends not only on the identities and positions of the advertisers in sponsored listings but also the composition of online consumers who exhibit distinct search behaviors.

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Consumer search in the U.S. auto industry: The role of dealership visits

2020

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In many markets, consumers visit stores and physically inspect products before making purchase decisions. We view the inspection of a product at a retail location as a search for product fit. We quantify the cost and benefit from searching for product fit using a discrete choice model of demand with optimal sequential search. In these models, the benefit of searching is measured by the standard deviation of the product fit and has, heretofore, been fixed to one in estimation. We show that, with an exogenous search cost shifter, both the cost and benefit of searching can be separately estimated. Our empirical setting is the U.S. automotive market. We assemble a unique data set containing individual-level smartphone geolocation data that inform us about dealership visits. We also obtain information on new vehicle purchases from proprietary DMV registration data. Our exogenous cost shifter is the distance a consumer must travel to visit a dealership. Our results show that the benefit provided by dealerships to consumers is substantial. Within our empirical context, failure to estimate the standard deviation of the product fit leads to biased search cost and consumer surplus estimates and to inaccurate predictions regarding consumers' number of searches and effects of at-home test drive programs.

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Simultaneous or Sequential? Search Strategies in the U.S. Auto Insurance Industry

Cited by 49 publications

References 47 publications

Advertising, consumer awareness, and choice: evidence from the U.S. banking industry

Advertising, consumer awareness, and choice: evidence from the U.S. banking industry

Consumer Search Activities and the Value of Ad Positions in Sponsored Search Advertising

Consumer search in the U.S. auto industry: The role of dealership visits

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