Speaker’s Name: Jun B. Kim (Associate Prof./Hong Kong University of Science and Technology)
Empirical models of consumer search typically assume that consumers are fully informed about key product attribute values prior to search and their search objective is resolve the remaining idiosyncratic match values of the products. However, this full information assumption may fail to reflect common shopping environments in which consumers have access to a subset of key product information prior to their search activities. For instance, product links at many online retailers do not reveal all key product attribute values. In this paper, we develop an empirical model of search and choice that explicitly incorporates differential information sets consumers face during search and choice. The model, based on identical utility structure, allows us to introduce heteroscedasticity to choice model and capture rich consumer behaviors of search and choice. In an empirical application, we apply our model to microwave product category at Amazon.com and study the consumer welfare implications of differential information sets during consumer search.
Keywords: optimal sequential search, choice model, information modeling, heteroscedasticity, online retailing