Consumer Sequential Search: Not Enough or Too Much?
We 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.
Volume (Year): 22 (2003)
Issue (Month): 4 (October)
|Contact details of provider:|| Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA|
Web page: http://www.informs.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Claxton, John D & Fry, Joseph N & Portis, Bernard, 1974. " A Taxonomy of Prepurchase Information Gathering Patterns," Journal of Consumer Research, Oxford University Press, vol. 1(3), pages 35-42, December.
- 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, Oxford University Press, vol. 10(4), pages 417-431, March.
- 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 301-329, September.
- Dueker, Michael, 1999.
"Conditional Heteroscedasticity in Qualitative Response Models of Time Series: A Gibbs-Sampling Approach to the Bank Prime Rate,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 17(4), pages 466-472, October.
- Michael J. 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.
- Sonnemans, Joep, 1998. "Strategies of search," Journal of Economic Behavior & Organization, Elsevier, vol. 35(3), pages 309-332, April.
- Joep Sonnemans, 1998.
"Decision and Strategies in a Sequential Search Experiment,"
Tinbergen Institute Discussion Papers
98-032/1, Tinbergen Institute.
- Sonnemans, Joep, 2000. "Decisions and strategies in a sequential search experiment," Journal of Economic Psychology, Elsevier, vol. 21(1), pages 91-102, February.
- Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey: Part I," Economic Inquiry, Western Economic Association International, vol. 14(2), pages 155-189, June.
- 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, Oxford University Press, vol. 5(3), pages 176-186, December.
- Schotter, Andrew & Braunstein, Yale M, 1981. "Economic Search: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 19(1), pages 1-25, January.
- Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 347-368, September.
- Kogut, Carl A., 1992. "Recall in consumer search," Journal of Economic Behavior & Organization, Elsevier, vol. 17(1), pages 141-151, January.
- Brian T. Ratchford & Narasimhan Srinivasan, 1993. "An Empirical Investigation of Returns to Search," Marketing Science, INFORMS, vol. 12(1), pages 73-87.
- Kogut, Carl A., 1990. "Consumer search behavior and sunk costs," Journal of Economic Behavior & Organization, Elsevier, vol. 14(3), pages 381-392, December.
When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:22:y:2003:i:4:p:503-519. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.