Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 9, 2022 erstellt
Beschreibung:
Empirical search cost estimates tend to increase in the size of the transaction, even ifsearch can be done conveniently online. To assess this pattern systematically, we conductan online search experiment in which we manipulate the price scale while keeping thephysical search effort for each price quote constant. Based on a standard search model,we confirm that search cost estimates indeed increase considerably in the price scale. Wethen modify the search model and allow for diminishing sensitivity, i.e., the tendency thatpeople become less sensitive to price variations of fixed size when the price of the goodincreases. We find substantial degrees of diminishing sensitivity and obtain search cost estimatesthat are scale-independent. Importantly, these estimates are in line with subjects'true opportunity costs of time. Finally, we show that the consumer welfare loss from diminishingsensitivity can be quite substantial