Consumer Search with Costly Recall

Tinbergen Institute Discussion Paper No. 08-002/1

Posted: 24 Jan 2008

See all articles by Maarten Janssen

Maarten Janssen

University of Vienna - Faculty of Business, Economics, and Statistics

Alexei Parakhonyak

University of Oxford - Department of Economics

Date Written: January 11, 2008

Abstract

This paper builds a consumer search model where the cost of going back to stores already searched is explicitly taken into account. We show that the optimal search rule under costly recall is very different from the optimal search rule under perfect recall. Under costly recall, the optimal search behaviour is nonstationary and, moreover, the reservation price is not independent of previously sampled prices. We fully characterize the optimal search rule under costly recall when a finite number of firms draws price quotes from a given distribution.

Keywords: Search, Costly Recall

JEL Classification: C61, D11, D83

Suggested Citation

Janssen, Maarten C. W. and Parakhonyak, Alexei, Consumer Search with Costly Recall (January 11, 2008). Tinbergen Institute Discussion Paper No. 08-002/1, Available at SSRN: https://ssrn.com/abstract=1086289

Maarten C. W. Janssen (Contact Author)

University of Vienna - Faculty of Business, Economics, and Statistics ( email )

Vienna, A-1210
Austria

Alexei Parakhonyak

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
625
PlumX Metrics