Research seminar by Alexei Parakhonyak (HSE and ICEF): «Consumer search with costly second visits»
Thursday, December 16 International College of Economics held the Research seminar.
Venue: Pokrovski Bulvar, 11, Room Zh-822
Speaker: Alexei Parakhonyak (HSE and ICEF)
Theme: «Consumer search with costly second visits» (joint with Maarten C.W. Janssen)
Abstract: This paper builds a consumer search model where unlike previous search models the cost of going back to stores already searched is explicitly taken into account. We show that the optimal search rule under costly second visits is very different from the optimal search rule when consumers can go back to stores previously visited at no cost. Under costly second visits, 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 second visits when a finite number of firms draws price quotes from a given distribution.