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Limited Attention to Search Costs in the Gasoline Retail Market: Evidence from a Choice Experiment on Consumer Willingness to Search

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  • Carolina Castilla
  • Timothy Haab

Abstract

We conduct a choice experiment to investigate whether U.S. gasoline consumers exhibit limited attention to the costs of searching for lower prices. When consumers search for prices as they drive, the search cost is a function of the amount of gasoline consumed while driving and the time spent searching for prices. We randomize the amount of information we provide the respondents to a survey about search costs in one of 3 ways: time, gasoline, or both. Results indicate that cognitive costs cause inattention to time costs. We also find that respondents overestimate the cost of the gasoline used while driving, thus forgoing consumer surplus. Copyright 2013, Oxford University Press.

Suggested Citation

  • Carolina Castilla & Timothy Haab, 2013. "Limited Attention to Search Costs in the Gasoline Retail Market: Evidence from a Choice Experiment on Consumer Willingness to Search," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(1), pages 181-199.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:1:p:181-199
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    File URL: http://hdl.handle.net/10.1093/ajae/aas131
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    Cited by:

    1. Xu, Jiayi & Zhang, Xiao-Bing & Liu, Yang, 2024. "Asymmetric search behavior for gasoline prices: Evidence from the Chinese gasoline market," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 699-712.
    2. Carolina Castilla & Timothy Haab, 2015. "Asymmetric search and prospect theory: choice experiment on consumer willingness to search in the gasoline retail market," Applied Economics, Taylor & Francis Journals, vol. 47(8), pages 756-778, February.
    3. Farías, Pablo, 2019. "Determinants of knowledge of personal loans' total costs: How price consciousness, financial literacy, purchase recency and frequency work together," Journal of Business Research, Elsevier, vol. 102(C), pages 212-219.
    4. Lefoll, Erwin & Günther, Isabel & Veronesi, Marcella, 2022. "Low Demand for Fair Trade Chocolate: Lack of Efficiency, Attention, Knowledge or Trust?," VfS Annual Conference 2022 (Basel): Big Data in Economics 264065, Verein für Socialpolitik / German Economic Association.

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