Over-Paid Search: When Bricks-and-Mortar Retailers Should Not Use Paid Search

Current research on paid search highlights its ability to enhance online as well as offline sales but is limited to pure online players and multi-channel firms. This paper presents a controlled field experiment which investigates whether paid search can increase sales for bricks-and-mortar retailers who solely sell their products via local stores and rely on informational websites to reach their customers. Results suggest that paid search increases the number of potential customers by enhancing the reach of online marketing initiatives. Yet, using a difference-in-differences analysis, our findings show that paid search fails to increase offline sales. Local store customers primarily use paid search as a navigational shortcut to the chain’s website which they would have reached even without being exposed to paid search. Consequently, bricks-and-mortar retailers should approach paid search cautiously: whilst it can enhance the reach of marketing initiatives, it seems to have little effect on improving offline purchases

Teaching Case: Paid Search Wars

This case analyzes the complex interactions between firms in the interrelated areas of search engines and portals after the dot com crash of 2000. Overture, a 1998 start-up, had transformed the online advertising market through the innovation of paid search, in which advertisers bid for top position for search terms. These results were provided to the portals and appeared alongside organic search results when a search was done. But Overture became a victim of its own success as the portals used their audience control to gain a greater share of advertising revenues. Google entered the paid search market in 2002 which ultimately led to Overture losing its independence and becoming a Yahoo subsidiary in 2003. As Google grew rapidly and expanded into other markets Yahoo and MSN attempted without success to counteract its influence. By February 2008 Google had been the clear winner of this rivalry, with Yahoo severely weakened. This culminated in an attempted Microsoft takeover of Yahoo with the main aim of stopping Google, a development Google was determined to prevent. This led to Google cooperating with Yahoo on paid search and Microsoft subsequently withdrawing its bid in May 2008

Tenure and Experience Effects on Wages: A Theory

This paper investigates equilibria in a labor market where firms post wage/tenure contracts and risk-averse workers, both employed and unemployed, search for better paid job opportunities. Different firms typically offer different contracts. Workers accumulate general human capital through learning-by-doing. With on-the-job search, a worker’s wage evolves endogenously over time through experience effects, tenure effects and quits to better paid employment. This equilibrium approach suggests how to identify econometrically between experience and tenure effects on worker wages.experience, tenure, search, equilibrium

Searching for Multiple Objects in Multiple Locations

Many practical search problems concern the search for multiple hidden objects or agents, such as earthquake survivors. In such problems, knowing only the list of possible locations, the Searcher needs to find all the hidden objects by visiting these locations one by one. To study this problem, we formulate new game-theoretic models of discrete search between a Hider and a Searcher. The Hider hides $k$ balls in $n$ boxes, and the Searcher opens the boxes one by one with the aim of finding all the balls. Every time the Searcher opens a box she must pay its search cost, and she either finds one of the balls it contains or learns that it is empty. If the Hider is an adversary, an appropriate payoff function may be the expected total search cost paid to find all the balls, while if the Hider is Nature, a more appropriate payoff function may be the difference between the total amount paid and the amount the Searcher would have to pay if she knew the locations of the balls a priori (the regret). We give a full solution to the regret version of this game, and a partial solution to the search cost version. We also consider variations on these games for which the Hider can hide at most one ball in each box. The search cost version of this game has already been solved in previous work, and we give a partial solution in the regret version

Health Insurance on the Internet and the Economics of Search

This paper explores the level and dispersion of premiums paid for individual health insurance by comparing asking price' data posted on an electronic insurance exchange with survey data on premiums actually paid in the period just before the advent of electronic exchanges. The primary theoretical question is whether the pattern of differences between asking prices and transactions prices can be explained using a simple search theory. We hypothesize, following suggestions of Stigler and Rothschild, that higher risks who expect to pay higher premiums for a given policy will engage in more intensive search than lower risks, given the same distribution of asking prices. As a result, for a given distribution of asking prices, the dispersion of premiums actually paid (transactions prices) will be smaller for higher risks. Therefore, the introduction of an electronic exchange should have a larger potential influence on the dispersion and level of premiums paid for lower risks than for higher risks. We find evidence consistent with each of these hypotheses.

Paid Placement: Advertising and Search on the Internet

Paid placement, where advertisers bid payments to a search engine to have their products appear next to keyword search results, has emerged as a predominant form of advertising on the Internet. This paper studies a product-di¤erentiation model where consumers are initially uncertain about the desirability of and valuation for di¤erent sellers products, and can learn about a seller s product through a costly search. In equilibrium, a seller bids more for placement when his product is more relevant for a given keyword, and the paid placement of sellers by the search engine reveals information about the relevance of their products. This results in e¢ cient (sequential) search by consumers and increases total output

On the Job Search and the Wage Distribution

Estimates of the structural parameters of a job separation model derived from the theory of on-the-job search are reported in this paper. Given that each employer pays the same wage to observably equivalent workers but wages are dispersed across employers, the theory implies that an employer's separation flow is the sum of an exogenous outflow unrelated to the wage paid and a job-to-job flow that decreases with the employer's wage. The specification estimated allows worker search effort to depend on the wage currently earned. The empirical results imply that search effort declines with the wage paid, as the theory predicts, using Danish IDA data for the years 1994-1995. Furthermore, the estimates for the full sample and four occupational sub-samples explain the employment effect, defined as the horizontal difference between the distribution of wages earned and the distribution of wages offered.

Intelligent Personalized Searching

Search engine is a very useful tool for almost everyone nowadays. People use search engine for the purpose of searching about their personal finance, restaurants, electronic products, and travel information, to name a few. As helpful as search engines are in terms of providing information, they can also manipulate people behaviors because most people trust online information without a doubt. Furthermore, ordinary users usually only pay attention the highest-ranking pages from the search results. Knowing this predictable user behavior, search engine providers such as Google and Yahoo take advantage and use it as a tool for them to generate profit. Search engine providers are enterprise companies with the goal to generate profit, and an easy way for them to do so is by ranking up particular web pages to promote the product or services of their own or their paid customers. The results from search engine could be misleading. The goal of this project is to filter the bias from search results and provide best matches on behalf of users’ interest