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Uncertainty and Shopping Behaviour: An Experimental Analysis

Author

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  • David M. Grether
  • Alan Schwartz
  • Louis L. Wilde

Abstract

This paper reports experimental tests of three search equilibrium models. These models which differ only in the search strategies available to the buyers have qualitatively different predictions, that is, equilibria: price distributions, single price equilibria at the competitive price and at the monopoly price and two price equilibria. The experimental outcomes generally were consistent with the models' predictions. This suggests that debate on the utility of this class of models should shift to the realism of the models' assumptions rather than focus on their ability to characterize market outcomes. Also, since the basic models have been validated, the project of analysing experimentally the results of relaxing some of their assumptions seems worthwhile.

Suggested Citation

  • David M. Grether & Alan Schwartz & Louis L. Wilde, 1988. "Uncertainty and Shopping Behaviour: An Experimental Analysis," Review of Economic Studies, Oxford University Press, vol. 55(2), pages 323-342.
  • Handle: RePEc:oup:restud:v:55:y:1988:i:2:p:323-342.
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    File URL: http://hdl.handle.net/10.2307/2297584
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    Citations

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    Cited by:

    1. Bayer, Ralph-C. & Ke, Changxia, 2013. "Discounts and consumer search behavior: The role of framing," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 215-224.
    2. Ralph-C Bayer & Changxia Ke, 2011. "Are "Rockets and Feathers" Caused by Search or Informational Frictions," Working Papers are_rockets_and_feathers_, Max Planck Institute for Tax Law and Public Finance.
    3. Bengtsson, Niklas, 2011. "Regulation Failure and CO2-emissions: An Experimental Investigation of the Cape Town Taxi Market," Working Paper Series, Center for Labor Studies 2011:13, Uppsala University, Department of Economics, revised 12 Aug 2013.
    4. Huailu Li & Kevin Lang & Kaiwen Leong, "undated". "Does Competition Eliminate Discrimination? Evidence from the Commercial Sex Market in Singapore," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-275, Boston University - Department of Economics.
    5. James Cox & Ronald Oaxaca, 2000. "Good News and Bad News: Search from Unknown Wage Offer Distributions," Experimental Economics, Springer;Economic Science Association, vol. 2(3), pages 197-225, March.
    6. Yavas, Abdullah, 2001. "The immediacy service of the specialist as a coordination mechanism," International Review of Economics & Finance, Elsevier, vol. 10(3), pages 205-221, July.
    7. Bengtsson, Niklas, 2015. "Efficient informal trade: Theory and experimental evidence from the Cape Town taxi market," Journal of Development Economics, Elsevier, vol. 115(C), pages 85-98.
    8. Ralph-C Bayer & Changxia Ke, 2010. "Rockets and Feathers in the Laboratory," School of Economics Working Papers 2010-20, University of Adelaide, School of Economics.
    9. Berlin, Mitchell & Mester, Loretta J., 2004. "Credit card rates and consumer search," Review of Financial Economics, Elsevier, vol. 13(1-2), pages 179-198.
    10. Dmitry Ryvkin & Danila Serra, 2015. "Is more competition always better? An experimental study of extortionary corruption," Working Papers wp2015_10_01, Department of Economics, Florida State University.
    11. Alexander L. Brown & Ajalavat Viriyavipart & Xiaoyuan Wang, 2014. "Exploding Offers with Experimental Consumer Goods," Working Papers 20141006-001, Texas A&M University, Department of Economics.
    12. Sebnem Bahadir-Lust & Jens-Peter Loy & Christoph R. Weiss, 2007. "Are they always offering the lowest price? An empirical analysis of the persistence of price dispersion in a low inflation environment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 777-788.
    13. repec:txm:wpaper:20141106-10001 is not listed on IDEAS
    14. repec:eee:eecrev:v:104:y:2018:i:c:p:167-184 is not listed on IDEAS
    15. Cason, Timothy N. & Datta, Shakun, 2006. "An experimental study of price dispersion in an optimal search model with advertising," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 639-665, May.

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