- Search cost
Search costs are one facet of
transaction costsor switching costs. Rational consumers will continue to search for a better product or service until the marginal costof searching exceeds the marginal benefit.
The costs of searching are divided into external and internal costs (Smith et al, 1999). External costs include the monetary costs of acquiring the information, and the
opportunity costof the time taken up in searching. External costs are not under the consumer's control. All they can do is choose whether or not to incur them. Internal costs include the mental effort given over to undertaking the search, sorting the incoming information, and integrating it with what the consumer already knows. Internal costs are determined by the consumer's ability to undertake the search, and this in turn depends on intelligence, prior knowledge, education and training. These internal costs are the background to the study of bounded rationality.
Internetwas expected to eliminate search costs (Pereira, 2005). For example, electronic commercewas predicted to cause disintermediationas search costs become low enough for end-consumers to incur them directly instead of employing retailers to do this for them. This would in turn lead to lower prices and less variation between prices quoted by different sellers.
*Gerald E. Smith, Meera P. Venkatraman , Ruby Roy Dholakia, Diagnosing the search cost effect: Waiting time and the moderating impact of prior category knowledge, "Journal of Economic Psychology" 20 (1999) 285 – 314
*Pedro Pereira, Do lower search costs reduce prices and price dispersion? "Information Economics and Policy" 17 (2005) 61–72
Wikimedia Foundation. 2010.
Look at other dictionaries:
Search Cost — The time, energy and money expended by a consumer who is researching a product or service for purchase. Search costs include the opportunity cost of the time and energy spent on searching time and energy that could have been devoted to other… … Investment dictionary
Search theory — In economics, search theory (or just search) is the study of an individual s optimal strategy when choosing from a series of potential opportunities of random quality, given that delaying choice is costly. Search models illustrate how best to… … Wikipedia
Cost per click — (CPC) is the amount of money an advertiser pays search engines and other Internet publishers for a single click on its advertisement that brings one visitor to its website.ee also* Ad serving * Click through rate (CTR) * Compensation methods *… … Wikipedia
Cost Per Engagement — (CPE) is an online advertising pricing structure introduced into the market in 2008. [ [http://www.techcrunch.com/2008/07/09/videoegg launches new video ad units maybe youtube should pay attention TechCrunch] , TechCrunch (2008 7 9)] Differing… … Wikipedia
Cost of Living (Star Trek: The Next Generation) — Cost of Living Star Trek: The Next Generation episode Lwaxana Troi greets her fiancé Episode no … Wikipedia
Search advertising — In Internet Marketing, Search Advertising is a method of placing online advertisements on Web pages that show results from search engine queries. Through the same search engine advertising services, ads can also be placed on Web pages with other… … Wikipedia
Search engine optimization — SEO redirects here. For other uses, see SEO (disambiguation). Internet marketing … Wikipedia
Search for extraterrestrial intelligence — The search for extraterrestrial intelligence is sometimes abbreviated as SETI. For other uses, see SETI (disambiguation). Screen shot of the screensaver for SETI@home, a distributed computing project in which volunteers donate idle computer power … Wikipedia
Cost per impression — Internet marketing Display advertising Email marketing E mail marketing software Interactive advertising … Wikipedia
Cost per action — Internet marketing Display advertising Email marketing E mail marketing software Interactive advertising … Wikipedia