Zettelmeyer, Florian, Fiona  Scott Morton, and Jorge Silva-Risso, "Cowboys or Cowards: Why are Internet Car Prices Lower?," (November 2005).

Abstract. This paper provides evidence that consumer use of Internet referral services lowers purchase prices in an important established offline industry, the retail auto industry. We analyze a large dataset of transaction prices for new automobiles and referral data from Autobytel.com. Using an instrumental variables approach to control for selection, we find that buying a car through Autobytel.com reduces the price a consumer pays by approximately 2.4%. This is in contrast to the on average 1% lower prices that online buyers pay compared to offline consumers, for the same car. This suggests that consumers who use an Internet referral service are not those who would have obtained a low price even in the absence of the Internet. Instead, our findings are consistent with consumers choosing to use Autobytel.com because they know that they would do poorly in the traditional channel, perhaps because they have a high personal cost to collecting information and bargaining. We estimate that savings to this initial group of early adopters who use Autobytel.com are at least $240 million per year. Since there are other referral and informational sites that may also help consumers bargain more effectively with dealers, we conclude that - at least at the time of our study - the Internet is facilitating a substantial redistribution of surplus in the retail auto industry.  Download pdf.

Rogers, Waymond and Solomon Negash, “The Effects of Web-Based Technologies on Knowledge Transfer,” (November 2005).

Abstract.  Web-based technologies are entering into our lives at a rapid pace as well as impacting our learning habits.  Due to the arrival of powerful information technologies, major challenges to organizations are viewed as the producing and processing of knowledge.  Internet portals represent an extension of knowledge transfer for users.  Suppose you are an individual interested in learning more about the products/services of a company.  Will the information, service, and perceptions of the quality of the company’s web-based services strongly influence your decision to retain a company’s products/services?  Download pdf.

This working paper has been revised.  Please see:

Novak, Thomas P. and Donna L. Hoffman, “The Fit of Thinking Style and Situation:  New Meassures of Situation-Specific Experiential and Rational Cognition” (August 27, 2007).

Hoffman, Donna L, "Can We Live Without the Internet? Toward a Model of Internet Indispensability," (April 2005).

Presentation given at the Colloquium on Information Society and Technology, Information Law Institute, Department of Culture and Communication, New York University, Friday, April 22, 2005. Download pdf of Powerpoint slides. 

Li, Shibo, and Patrali Chatterjee, "Shopping Cart Abandonment at Retail Websites – A Multi-Stage Model of Online Shopping Behavior," (February 2005).

We propose a four-stage model of online shopping process to study shopping cart abandonment.  Consumer heterogeneity is accounted within a hierarchical Bayesian framework. A hidden Markov switching process is used to capture unobserved user navigation orientation. Managerial implications for customized web pages to reduce the attrition at each stage are discussed.  Download pdf.

White, Tiffany, Donna L. Hoffman, and Thomas P. Novak, "Forgotten Favors: Biased Account Keeping in Information-Driven Consumer-Seller Relationships," (February 2005)

Download pdf.

Zettelmeyer, Florian, Fiona  Scott Morton, and Jorge Silva-Risso, "How the Internet Lowers Prices: Evidence from Matched Survey and Auto Transaction Data," (2005).

Abstract.  While research has shown that the Internet has lowered the prices in some established industries, we know little about how using the Internet lowers prices.  We answer this question for the auto retailing industry with matched survey and transaction data on 1,500 car purchases in California. We show that the Internet lowers prices for two distinct reasons. First, the Internet informs consumers about the invoice price of dealers. Second, the referral process of online buying services helps consumers obtain lower prices. The combined information and referral price effects are -1.5%, or 22% of dealers’ average gross vehicle profit. We also find that the benefits of gathering information differ by consumer type. Buyers who have a high disutility of bargaining but who have collected information on the specific car they eventually purchase pay 1.5% less than they otherwise would. In contrast, buyers who like the bargaining process do not benefit from such information.  Download pdf.