Consumer Search, Beliefs, and Context Effects in Digital Markets (OeNB Project No. 19009)
In many online markets, firms enjoy substantial market power and consumers’ search costs seem to be large even when convenient search tools are available. In this project, we examine why is this the case. To this end, we theoretically and empirically analyze the extent to which online search costs are driven by (i) real-effort costs, (ii) psychological effects, and (iii) informational frictions. The main output from the project is validated information on how consumers search for lower prices, which factors determine their search effort, and how to estimate and interpret search cost estimates from observational data. Further, we study to what extent markets could be made more competitive through information provision.
Publications and Working Papers
„Evaluating Search Cost Models: Estimation and Prediction,“ joint with Adrian Düll, Heiko Karle, and Simon Martin, accepted for publication in Quantitative Marketing and Economics.
„Competitive Markets, Add-On Prices, and Bounded Rationality,“ revised and resubmitted to Journal of Economic Theory.
