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Behavioral heterogeneity in dynamic search situations: Theory and experimental evidence

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  • Schunk, Daniel

Abstract

This paper presents models for search behavior and provides experimental evidence that behavioral heterogeneity in search is linked to heterogeneity in individual preferences. Observed search behavior is more consistent with a new model that assumes dynamic updating of utility reference points than with models that are based on expected-utility maximization. Specifically, reference point updating and loss aversion play a role for more than a third of the population. The findings are of practical relevance as well as of interest for researchers who incorporate behavioral heterogeneity into models of dynamic choice behavior in, for example, consumer economics, labor economics, finance, and decision theory.

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  • 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.
  • Handle: RePEc:eee:dyncon:v:33:y:2009:i:9:p:1719-1738
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    Cited by:

    1. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    2. Inukai, Keigo & Kawata, Keisuke & Sasaki, Masaru, 2017. "Committee Search with Ex-ante Heterogeneous Agents: Theory and Experimental Evidence," IZA Discussion Papers 10760, Institute for the Study of Labor (IZA).
    3. Antonio FILIPPIN & Paolo CROSETTO, 2014. "A Reconsideration of Gender Differences in Risk Attitudes," Departmental Working Papers 2014-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. 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.
    5. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
    6. Mak, Vincent & Rapoport, Amnon & Seale, Darryl A., 2014. "Sequential search by groups with rank-dependent payoffs: An experimental study," Organizational Behavior and Human Decision Processes, Elsevier, vol. 124(2), pages 256-267.
    7. Takao Asano & Hiroko Okudaira & Masaru Sasaki, 2015. "An Experimental Test of a Search Model under Ambiguity," KIER Working Papers 913, Kyoto University, Institute of Economic Research.
    8. Hommes, Cars, 2011. "The heterogeneous expectations hypothesis: Some evidence from the lab," Journal of Economic Dynamics and Control, Elsevier, vol. 35(1), pages 1-24, January.
    9. Hizen, Yoichi & Kawata, Keisuke & Sasaki, Masaru, 2013. "An experimental test of a committee search model," European Economic Review, Elsevier, vol. 61(C), pages 59-76.
    10. Takao Asano & Hiroko Okudaira & Masaru Sasaki, 2015. "An experimental test of a search model under ambiguity," Theory and Decision, Springer, vol. 79(4), pages 627-637, December.

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