Consumer Search and Social Learning in Agentic Markets

Motivated by agentic markets -- two-sided markets in which AI tools facilitate search -- we propose a model that incorporates individual consumer search and market-wide learning, solve it to understand the long-run market outcomes, and then study the impact of improved search technologies on these outcomes. A sequence of consumers engage in costly search to acquire progressively refined signals of product fit prior to purchase. The market observes acquired signals and post-transaction feedback thereby impacting future searches. We solve for the per-consumer optimal search policy and characterize the steady-state of the learning dynamics. As search technologies reduce the cost and/or increase the informativeness of search, they cause an improvement in learning and consumer surplus. Using numerical simulations, we also find that these technologies improve the rate of learning and the trajectory of consumer utility. Notably, we show that if the market is unable to observe acquired signals, search technologies can degrade market outcomes, highlighting the importance of transparency in agentic markets.