What is it about?
Consumers spend a lot of time searching for information online and e-retailing is becoming increasingly important. The paper proposes an approach to quantify how much consumers value different product characteristics and how much effort they are willing to put to explore different options in an online retailer.
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Why is it important?
We describe in detail how to use data from an online retailer (e.g., amazon.com) to quantify consumer behavior during search and purchase. This is important because many decisions made by managers depend on how consumers react to product characteristics and are significantly influenced by how much information they can collect before deciding.
Perspectives
I find this paper interesting because of the strong interaction between the two stages - search and purchase - and its implications on the econometric side: some previous assumptions about how unobserved factors impact choice - e.g., normal distributed errors - do not apply anymore.
Paulo Albuquerque
INSEAD
Read the Original
This page is a summary of: The Probit Choice Model Under Sequential Search with an Application to Online Retailing, Management Science, November 2017, INFORMS,
DOI: 10.1287/mnsc.2016.2545.
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