Working Paper: CEPR ID: DP6939
Authors: Uwe Dulleck; Franz Hackl; Bernhard Weiss; Rudolf Winter-Ebmer
Abstract: In this article we propose a two stage procedure to model demand decisions by customers who are balancing several dimensions of a product. We then test our procedure by analyzing the behavior of buyers from an Austrian price comparison site. Although in such a market a consumer will typically search for the cheapest price for a given product, reliability and service of the supplier are other important characteristics of a retailer. In our data, consumers follow such a two stage procedure: they select a shortlist of suppliers by using the price variable only; finally, they trade off reliability and price among these shortlisted suppliers.
Keywords: decision theory; ecommerce; heuristics; price comparison; seller reputation
JEL Codes: D83; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| price (D41) | initial supplier selection (L81) |
| firm evaluation score (G32) | number of clicks (Y10) |
| initial supplier selection (L81) | final decision (D70) |
| price (D41) | final decision (D70) |