Consumer Sequential Search: Not Enough or Too Much?
AbstractWe study sequential search behavior in a generalized "secretary problem" in which a single object is to be selected from a set ofalternatives. Alternatives are inspected in a random order, one at a time, and only the rank order of the current alternative relative to the ones that have already been observed can be ascertained. At each period, the consumer may either accept the current alternative, continue to search and pay a fixed cost, or recall an alternative that has already been inspected. A recalled alternative is assumed to be available with a known probability. The consumer's goal is to select the overall best alternative from the fixed set. We describe the results of an experiment designed to test the optimal model and compare it to a behavioral decision model that incorporates local patterns of the observed sequence. Both set size and search cost are manipulated experimentally in a 2x2 factorial design. Our results show that cost and set size affect the amount of search in the predicted direction. However, in the two no-cost conditions subjects search too little in comparison to the optimal model, whereas in the two cost conditions they search too much. The behavioral decision rule that we propose provides a possible account for the observed pattern of the behavioral regularities.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by INFORMS in its journal Marketing Science.
Volume (Year): 22 (2003)
Issue (Month): 4 (October)
Search Behavior; Sequential Choice Models; Behavioral Decision Rules; Information Processing;
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Eriksson, Kimmo & Strimling, Pontus, 2010. "The devil is in the details: Incorrect intuitions in optimal search," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 338-347, August.
- Feri, Francesco & Gantner, Anita, 2011. "Bargaining or searching for a better price? - An experimental study," Games and Economic Behavior, Elsevier, vol. 72(2), pages 376-399, June.
- Nakajima, Daisuke & Masatlioglu, Yusufcan, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
- Schunk, Daniel & Winter, Joachim, 2004.
"The Relationship Between Risk Attitudes and Heuristics in Search Tasks: A Laboratory Experiment,"
Sonderforschungsbereich 504 Publications
04-23, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
- Schunk, Daniel & Winter, Joachim, 2009. "The relationship between risk attitudes and heuristics in search tasks: A laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 347-360, August.
- Schunk, Daniel & Winter, Joachim, 2009. "The relationship between risk attitudes and heuristics in search tasks: A laboratory experiment," Munich Reprints in Economics 19880, University of Munich, Department of Economics.
- Schunk, Daniel & Winter, Joachim, 2007. "The Relationship Between Risk Attitudes and Heuristics in Search Tasks: A Laboratory Experiment," Discussion Papers in Economics 1377, University of Munich, Department of Economics.
- Daniel Schunk & Joachim Winter, 2005. "The Relationship Between Risk Attitudes and Heuristics in Search Tasks: A Laboratory Experiment," MEA discussion paper series 05077, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Ibanez, Marcela & Czermak, Simon & Sutter, Matthias, 2008.
"Searching for a better deal - on the influence of group decision making, time pressure and gender in a search experiment,"
Working Papers in Economics
296, University of Gothenburg, Department of Economics.
- Marcela Ibanez & Simon Czermak & Matthias Sutter, . "Searching for a better deal ? On the influence of group decision making, time pressure and gender in a search experiment," Working Papers 2008-05, Faculty of Economics and Statistics, University of Innsbruck.
- Eric Johnson & Suzanne Shu & Benedict Dellaert & Craig Fox & Daniel Goldstein & Gerald Häubl & Richard Larrick & John Payne & Ellen Peters & David Schkade & Brian Wansink & Elke Weber, 2012. "Beyond nudges: Tools of a choice architecture," Marketing Letters, Springer, vol. 23(2), pages 487-504, June.
- Babur De Los Santos & Ali Hortacsu & Matthijs R. Wildenbeest, 2012.
"Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior,"
American Economic Review,
American Economic Association, vol. 102(6), pages 2955-80, October.
- Babur De los Santos & Ali Hortacsu & Matthijs R. Wildenbeest, 2009. "Testing Models of Consumer Search using Data on Web Browsing and Purchasing Behavior," Working Papers 2009-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Huang, Yanliu & Hutchinson, J. Wesley, 2013. "The roles of planning, learning, and mental models in repeated dynamic decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 122(2), pages 163-176.
- Botti, Simona & Hsee, Christopher K., 2010. "Dazed and confused by choice: How the temporal costs of choice freedom lead to undesirable outcomes," Organizational Behavior and Human Decision Processes, Elsevier, vol. 112(2), pages 161-171, July.
- Bearden, J. Neil & Connolly, Terry, 2007. "Multi-attribute sequential search," Organizational Behavior and Human Decision Processes, Elsevier, vol. 103(1), pages 147-158, May.
- Schunk, Daniel, 2009. "Behavioral heterogeneity in dynamic search situations: Theory and experimental evidence," Journal of Economic Dynamics and Control, Elsevier, vol. 33(9), pages 1719-1738, September.
- Fiona Scott Morton & Jorge Silva-Risso & Florian Zettelmeyer, 2011. "What matters in a price negotiation: Evidence from the U.S. auto retailing industry," Quantitative Marketing and Economics, Springer, vol. 9(4), pages 365-402, December.
- Bing Jing, 2007. "Product differentiation under imperfect information: When does offering a lower quality pay?," Quantitative Marketing and Economics, Springer, vol. 5(1), pages 35-61, March.
- Jos van Ommeren & Giovanni Russo, 2004. "Sequential or Non-sequential Recruitment?," Tinbergen Institute Discussion Papers 04-109/3, Tinbergen Institute, revised 15 Sep 2008.
- Jie Jennifer Zhang & Bing Jing, 2007. "The Impacts of Shopbots on Online Consumer Search," Working Papers 07-34, NET Institute, revised Sep 2007.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).
If references are entirely missing, you can add them using this form.