The Economics of Consumer Information Acquisition

Traditionally economists and consumer researchers have studied consumer behavior, especially under imperfect information, without paying a great deal of attention to one another. This is likely due to differences both in purpose and technique. Consumer researchers are generally concerned with individual choice, while economists focus on market outcomes. Even when economists propose detailed models of individual behavior, they tend to use these models to deduce propositions concerning overall market structure. Furthermore, consumer researchers draw data from both surveys and experiments, sources which economists distrust. This paper surveys recent theoretical work on consumer information acquisition, primarily by economists, arguing that consumer researchers and economists have much to learn from each other. There are two reasons for concentrating on theory. First, comprehensive surveys by James Bettman (1977) and Joseph Newman (1977) deal with the empirical literature. Second, and significantly, accompanying the recent attention afforded consumer information acquisition This paper surveys recent theoretical work by economists on consumer information aquisition. Both models of individual behavior and models of market equilibrium are discussed. These models are used to illustrate the point that there are significant advantages to greater collaboration between economists and consumer researchers.