Yahoo is researching areas such as microeconomics to help it better understand the behaviour of users, or of advertisers in areas such as keyword auctions.

Microeconomics is an area that Yahoo views as fundamental to its business, and Yahoo Research has created a department focused on research in this area, Prabhakar Raghavan, head of research at Yahoo told reporters on Thursday.

Yahoo wants to understand microeconomics well in order to tailor its services and price them for maximum value to all the participants, including users, advertisers and the company, Raghavan said.

The research arm has also set up a team of ethnographers, cognitive psychologists and sociologists to research new media experiences that will promote the formation of online communities, Raghavan said.

In the area of computer science, Yahoo Research is working on new middleware technology that will be more relevant to online communities than traditional relational databases.

Relational databases are good for running enterprise applications such as payroll and human resources, but they are not good for building applications like friendships and communities, the types of applications that Yahoo is interested in, Raghavan said.

Yahoo is also working on a new generation of task-centric search that will not be keyword based, but will analyse free text descriptions from users, to give them more relevant results than they are currently getting from search engines, Raghavan said. "We have to get much smarter to understand and define the user's intent and deliver to that intent," he added.

The company is also planning to set up a research lab in India, and is already on the hunt for staff. The lab will start to hire researchers in computer science, but may also seek those trained in the humanities such as economists, sociologists, and ethnographers, depending on their availability.

Yahoo already runs a product development centre in Bangalore, India, which is involved in developing key technologies used by Yahoo. The company did not disclose when its lab in India would be in operation, and how many staff it will hire.