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Pandora’s rules in the laboratory

Author

Listed:
  • Efthymios Lykopoulos

    (University of Cyprus)

  • Georgios Voucharas

    (University of Macedonia)

  • Dimitrios Xefteris

    (University of Cyprus)

Abstract

In theory, search conditions are a key determinant of Pandora’s rule (i.e. of the optimal search pattern), and of the eventual payoffs (Weitzman, 1979; Doval, 2018). We compare different search conditions in the laboratory and find strong evidence that they affect subjects’ order of inspection and payoffs greatly. Subjects are more conservative at the beginning of the search, and earn less if they are constrained to choose only among the inspected alternatives, than if they are not. These findings reinforce the empirical pertinence of the formal search literature, and generate novel insights regarding relevant settings of applied interest (e.g. the impact of market digitization on consumer behavior).

Suggested Citation

  • Efthymios Lykopoulos & Georgios Voucharas & Dimitrios Xefteris, 2022. "Pandora’s rules in the laboratory," Experimental Economics, Springer;Economic Science Association, vol. 25(5), pages 1492-1514, November.
    • Handle: RePEc:kap:expeco:v:25:y:2022:i:5:d:10.1007_s10683-022-09770-x
    DOI: 10.1007/s10683-022-09770-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Pandora’s rule; Laboratory experiment; Weitzman; Search;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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