Partial‐depth search and search pattern comparisons

Abstract

AbstractThis paper compares consumers' optimal search behaviors and firms' strategic reactions in prices under two modes of search: parallel search and sequential search, with the incorporation of partial search depth that measures the amount of information to evaluate a product. Our analysis shows a series of new results: when products are partially evaluated, search depth is greater under sequential search than under parallel search; consumers search for (on average) more products either under parallel search or sequential search, depending on whether partial‐depth search is chosen; the equilibrium price is higher under parallel (sequential) search when search costs are high (low). Interestingly, parallel search might yield higher equilibrium prices with more products searched, compared with sequential search. This challenges the conventional wisdom in the search literature that more products searched lower prices because of the intensified competition.