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Consumer Search: Not Enough Or Too Much?

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Author Info

  • Rami Zwick

    (The Hong Kong University of Science and Technology)

  • Amnon Rapoport

    (University of Arizona)

  • Alison King Chung Lo

    (Duke University)

  • A. V. Muthukrishnan

    (The Hong Kong University of Science and Technology)

Abstract

We study search behavior in a generalized "secretary problem" environment in which consumers search sequentially for the best alternative from a known and finite set of multi-attribute alternatives. In contrast to most previous studies, we make no distributional assumptions about the quality of the alternatives. Rather, at each stage of the search the consumers are only assumed to be able to rank order the alternatives they have already inspected in terms of their overall quality. Our study departs from previous experimental investigations of the secretary problem by including search costs and allowing for recall (backward solicitation) of previously inspected alternatives. Both the number of alternatives and the cost of searching are manipulated experimentally in a factorial design. In the no-cost condition, we find that subjects do not search enough, whereas in the cost condition they search too much. We propose a simple behavioral decision model that incorporates both local and global patterns of the sequence--patterns that should have been ignored by a rational consumer--and then show that it can account for the major patterns of the observed results.

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File URL: http://128.118.178.162/eps/exp/papers/0110/0110002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Experimental with number 0110002.

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Length: 41 pages
Date of creation: 19 Oct 2001
Date of revision:
Handle: RePEc:wpa:wuwpex:0110002

Note: Type of Document - Acrobat PDF; prepared on PC; pages: 41; figures: included
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Web page: http://128.118.178.162

Related research

Keywords: search; secretary problem; Sequential Choice Models; experiment;

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References

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  1. Schotter, Andrew & Braunstein, Yale M, 1981. "Economic Search: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 19(1), pages 1-25, January.
  2. Goldman, Arieh & Johansson, J K, 1978. " Determinants of Search for Lower Prices: An Empirical Assessment of the Economics of Information Theory," Journal of Consumer Research, University of Chicago Press, vol. 5(3), pages 176-86, December.
  3. Michael Dueker, 1998. "Conditional heteroskedasticity in qualitative response models of time series: a Gibbs sampling approach to the bank prime rate," Working Papers 1998-011, Federal Reserve Bank of St. Louis.
  4. Cox, James C & Oaxaca, Ronald L, 1989. " Laboratory Experiments with a Finite-Horizon Job-Search Model," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 301-29, September.
  5. Urbany, Joel E, 1986. " An Experimental Examination of the Economics of Information," Journal of Consumer Research, University of Chicago Press, vol. 13(2), pages 257-71, September.
  6. Hey, John D., 1987. "Still searching," Journal of Economic Behavior & Organization, Elsevier, vol. 8(1), pages 137-144, March.
  7. Rami Zwick & Ching Chyi Lee, 1999. "Bargaining and Search: An Experimental Study," Experimental 9902003, EconWPA.
  8. Furse, David H & Punj, Girish N & Stewart, David W, 1984. " A Typology of Individual Search Strategies among Purchasers of New Automobiles," Journal of Consumer Research, University of Chicago Press, vol. 10(4), pages 417-31, March.
  9. Braunstein, Yale M & Schotter, Andrew, 1982. "Labor Market Search: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 20(1), pages 133-44, January.
  10. Seale, Darryl A. & Rapoport, Amnon, 1997. "Sequential Decision Making with Relative Ranks: An Experimental Investigation of the "Secretary Problem">," Organizational Behavior and Human Decision Processes, Elsevier, vol. 69(3), pages 221-236, March.
  11. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 347-68, September.
  12. Claxton, John D & Fry, Joseph N & Portis, Bernard, 1974. " A Taxonomy of Prepurchase Information Gathering Patterns," Journal of Consumer Research, University of Chicago Press, vol. 1(3), pages 35-42, December.
  13. Green, Paul E & Helsen, Kristiaan & Shandler, Bruce, 1988. " Conjoint Internal Validity under Alternative Profile Presentations," Journal of Consumer Research, University of Chicago Press, vol. 15(3), pages 392-97, December.
  14. Sonnemans, Joep, 1998. "Strategies of search," Journal of Economic Behavior & Organization, Elsevier, vol. 35(3), pages 309-332, April.
  15. Rami Zwick & Eythan Weg & Amnon Rapoport, 1999. "Invariance failure under subgame perfectness in sequential bargaining," Experimental 9903002, EconWPA.
  16. Saad, Gad & Russo, J. Edward, 1996. "Stopping Criteria in Sequential Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(3), pages 258-270, September.
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Citations

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Cited by:
  1. Siegfried Berninghaus & Werner Güth & M. Levati & Jianying Qiu, 2011. "Satisficing search versus aspiration adaptation in sales competition: experimental evidence," International Journal of Game Theory, Springer, vol. 40(1), pages 179-198, February.
  2. Werner Güth & Ev Martin & Torsten Weiland, 2006. "Aspiration formation and satisficing in isolated and competitive search," Papers on Strategic Interaction 2006-26, Max Planck Institute of Economics, Strategic Interaction Group.

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