Search, Learning and Tracking

I study the implications of preference uncertainty in a consumer search environment with and without tracking. Consumers encounter information that is predictive about their type while searching. Depending on what con- sumers learn, they stop searching without a purchase and before sampling all sellers. As search costs decrease, consumers search longer, shifting the demand curve outward and raising profits. Because learning changes consumers’ expectations, tracking the number of search attempts is informative about a consumer’s type. Search history-based pricing reduces profits and welfare in the presence of learning when search costs are low, yet it is the unique equilibrium outcome if tracking is feasible