ECONOMICS OF INFORMATION AND HETEROGENEOUS PRODUCTS

This study extends the economics of information model to include products with varying price-attribute combinations, as suggested by Ratchford (1980). For a sample of consumers, estimates of optimal search are compared to estimates of actual consumer search intentions to determine whether consumer search is optimal. The results show that the cost-benefit analysis explains substantially more variance in consumer search when the attributes of products are taken into account. In addition, this study shows that actual consumer search intentions are moderately correlated with optimal search. Surprisingly, consumers in the sample were actually willing to search more than is optimal.