Strategic Inattention in Product Search

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractOnline platforms provide search tools that help consumers to get betterfitting product offers. But this technology makes consumer search behavior also easily traceable for the platform and allows for real-time price discrimination. Consumers face a trade-off: Search intensely and receive better fits at potentially higher prices or restrict search behavior -be strategically inattentive -and receive a worse fit, but maybe a better deal. We study the strategic buyer-seller interaction in such a situation theoretically as well as experimentally. The search technology we use in the laboratory leads by construction to better-fitting products, but we indeed find that only sellers profit from the buyers' use of the offered search tools.

Privacy, Personalization, and Price Discrimination

“…Dinerstein et al (2018) find that greater horizontal differentiation between sellers -synonymous in our setting with finer segmentations -leads to higher prices and mark-ups for sellers. Recently, Hillenbrand and Hippel (2019) study experimentally the question of buyer-optimal information disclosure. The buyer chooses how to filter search results and the seller chooses prices accordingly.…”

Attention, Focus, and Economic Behavior

“…Wallheimer (2018) refers to software that can tell a firm whether a consumer already visited a competitors' website.9Hillenbrand and Hippel (2019) find in an experiment that a monopolist charges higher prices to consumers who use more filters, i.e., to consumers with stronger restrictions for a match.10 Honka, Hortaçsu, and Vitorino (2017) analyze consumers' awareness of banks and find that local branch presence affects awareness.…”