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Consumer online search with partially revealed information

Gu, Chris and Wang, Yike (2021) Consumer online search with partially revealed information. Management Science. ISSN 0025-1909 (In Press)

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Abstract

Modern-day search platforms generally have two layers of information presentation. The outer layer displays the collection of search results with attributes selected by platforms, and consumers click on a product to reveal all its attributes in the inner layer. The information revealed in the outer layer affects the search costs and the probability of finding a match. To address the managerial question of optimal information layout, we create an information complexity measure of the outer layer, and study the consumer search process for information at the expense of time and cognitive costs. We first conduct online random experiments to show that consumers respond to and actively reduce cognitive cost for which our information complexity measure provides a representation. Then, using a unique and rich panel tracking consumer search behaviors at a large online travel agency (OTA), we find cognitive cost is a major component of search cost, while loading time cost has a much smaller share. By varying the information revealed in the outer layer, we find price revelation shifts search behavior most dramatically compared to the other product attributes. We propose information layouts that Pareto-improve both revenue and consumer welfare for our OTA.

Item Type: Article
Official URL: https://pubsonline.informs.org/journal/mnsc
Additional Information: © 2021 INFORMS
Divisions: Economics
Subjects: H Social Sciences > HF Commerce
Date Deposited: 15 Apr 2021 06:12
Last Modified: 16 Apr 2021 23:15
URI: http://eprints.lse.ac.uk/id/eprint/109871

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