Search Friction

The time, effort, and cognitive cost a consumer must incur to compare prices, evaluate quality, and gather information before a purchase decision. The theoretical foundation was laid by Stigler (1961) and Diamond (1971), who showed how search costs prevent perfect price equalization and keep market prices above the competitive equilibrium.

In e-commerce, ranking algorithms amplify search friction by making comparison shopping cognitively expensive: when the top result is presented as the obvious choice, the cost of scrolling down and evaluating alternatives effectively rises. This manufactured friction benefits top-ranked sellers and is increasingly a focus of platform regulation debates, including the EU Digital Markets Act’s interest in ranking transparency.