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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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    8. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    9. 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.
    10. Stephan Billinger & Nils Stieglitz & Terry R. Schumacher, 2014. "Search on Rugged Landscapes: An Experimental Study," Organization Science, INFORMS, vol. 25(1), pages 93-108, February.
    11. 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.
    12. 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.
    13. Imen Bouhlel & Michela Chessa & Agnès Festré & Eric Guerci, 2019. "When to Stop? A Theoretical and Experimental Investigation of an Individual Search Task," GREDEG Working Papers 2019-40, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
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    15. Fu, Jingcheng & Sefton, Martin & Upward, Richard, 2019. "Social comparisons in job search," Journal of Economic Behavior & Organization, Elsevier, vol. 168(C), pages 338-361.
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