Prior Information and Consumer Search: Evidence from Eye-tracking

Abstract

This paper develops a search model in which both the information obtained during the search process and the information possessed by consumers prior to search influence their choices. We estimate our model on a data set from an experiment that has two novel features: (i) it contains information on consumers’ prior brand ownership, familiarity with each brand, and prior experience using different product features; and (ii) it uses eye-tracking methods to capture search behavior during the experiment. Using these data we show consumers are generally more likely to search and buy brands they own and are familiar with, highlighting the importance of their prior information. We then quantify the impact of prior information on consumer choices, as well as document the estimation bias arising when brand prior information is absent from the model. Finally, through a series of counterfactuals, we explore the managerial value of using consumers’ brand priors to construct personalized ranking-based recommendation systems.