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Search, choice, and revealed preference

Author Info

  • Caplin, Andrew

    ()

    (Department of Economics, New York University)

  • Dean, Mark

    ()

    (Department of Economics, Brown University)

Abstract

With complete information, choice of one option over another conveys preference. Yet when search is incomplete, this is not necessarily the case. It may instead reflect unawareness that a superior alternative was available. To separate these phenomena, we consider non-standard data on the evolution of provisional choices with contemplation time. We characterize precisely when the resulting data could have been generated by a general form of sequential search. We characterize also search that terminates based on a reservation utility stopping rule. We outline an experimental design that captures provisional choices in the pre-decision period.

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File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20110019/4779/167
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Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 6 (2011)
Issue (Month): 1 (January)
Pages:

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Handle: RePEc:the:publsh:592
Contact details of provider: Web page: http://econtheory.org

Keywords: Revealed preference; search theory; stochastic choice;

Find related papers by JEL classification:

  • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
  • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

References listed on IDEAS
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  1. Rubinstein, Ariel, 1988. "Similarity and decision-making under risk (is there a utility theory resolution to the Allais paradox?)," Journal of Economic Theory, Elsevier, vol. 46(1), pages 145-153, October.
  2. Dmitri Kuksov & J. Miguel Villas-Boas, 2010. "When More Alternatives Lead to Less Choice," Marketing Science, INFORMS, vol. 29(3), pages 507-524, 05-06.
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  4. K. Carrie Armel & Antonio Rangel, 2008. "The Impact of Computation Time and Experience on Decision Values," American Economic Review, American Economic Association, vol. 98(2), pages 163-68, May.
  5. Caplin, Andrew & Dean, Mark, 2011. "Search, choice, and revealed preference," Theoretical Economics, Econometric Society, vol. 6(1), January.
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  17. van der Lans, R.J.A., 2006. "Brand search," Other publications TiSEM befcc4df-d6a2-4437-85ce-6, Tilburg University, School of Economics and Management.
  18. Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, vol. 62(6), pages 1291-1326, November.
  19. Joseph Tao-yi Wang & Michael Spezio & Colin F. Camerer, 2010. "Pinocchio's Pupil: Using Eyetracking and Pupil Dilation to Understand Truth Telling and Deception in Sender-Receiver Games," American Economic Review, American Economic Association, vol. 100(3), pages 984-1007, June.
  20. Andrew Caplin & Mark Dean & Daniel Martin, 2011. "Search and Satisficing," American Economic Review, American Economic Association, vol. 101(7), pages 2899-2922, December.
  21. Brocas, Isabelle & Camerer, Colin & Carrillo, Juan D & Wang, Stephanie W., 2009. "Measuring attention and strategic behavior in games with private information," CEPR Discussion Papers 7529, C.E.P.R. Discussion Papers.
  22. Johnson, Eric J. & Camerer, Colin & Sen, Sankar & Rymon, Talia, 2002. "Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining," Journal of Economic Theory, Elsevier, vol. 104(1), pages 16-47, May.
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Cited by:

  1. Saptarshi Mukherjee, 2014. "Choice in ordered-tree-based decision problems," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(2), pages 471-496, August.
  2. Andrew Caplin & Mark Dean & Daniel Martin, 2011. "Search and Satisficing," American Economic Review, American Economic Association, vol. 101(7), pages 2899-2922, December.
  3. Andrew Caplin & Daniel Martin, 2015. "A Testable Theory of Imperfect Perception," Economic Journal, Royal Economic Society, vol. 125(582), pages 184-202, 02.
  4. Elena Reutskaja & Rosemarie Nagel & Colin F. Camerer & Antonio Rangel, 2011. "Search Dynamics in Consumer Choice under Time Pressure: An Eye-Tracking Study," American Economic Review, American Economic Association, vol. 101(2), pages 900-926, April.
  5. Frick, Mira, 0. "Monotone threshold representations," Theoretical Economics, Econometric Society.
  6. Caplin, Andrew & Dean, Mark, 2011. "Search, choice, and revealed preference," Theoretical Economics, Econometric Society, vol. 6(1), January.
  7. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Y. Ozbay, 2012. "Revealed Attention," American Economic Review, American Economic Association, vol. 102(5), pages 2183-2205, August.
  8. Papi, Mauro, 2013. "Satisficing and maximizing consumers in a monopolistic screening model," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 385-389.
  9. Dinko Dimitrov & Saptarshi Mukherjee & Nozomu Muto, 2016. "‘Divide-and-choose’ in list-based decision problems," Theory and Decision, Springer, vol. 81(1), pages 17-31, June.
  10. Nakajima, Daisuke & Masatlioglu, Yusufcan, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
  11. Dimitrov, Dinko & Mukherjee, Saptarshi & Muto, Nozomu, 2013. "List-based decision problems," Discussion Papers 2013-02, Graduate School of Economics, Hitotsubashi University.
  12. Papi, Mauro, 2012. "Satisficing choice procedures," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 451-462.
  13. Kfir Eliaz & Ariel Rubinstein, 2014. "A model of boundedly rational “neuro” agents," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 57(3), pages 515-528, November.
  14. Guney, Begum, 2014. "A theory of iterative choice in lists," Journal of Mathematical Economics, Elsevier, vol. 53(C), pages 26-32.
  15. Stoye, Jörg, 2015. "Choice theory when agents can randomize," Journal of Economic Theory, Elsevier, vol. 155(C), pages 131-151.
  16. Zolfaghari, Alireza & Sivakumar, Aruna & Polak, John, 2013. "Simplified probabilistic choice set formation models in a residential location choice context," Journal of choice modelling, Elsevier, vol. 9(C), pages 3-13.
  17. Victor Aguiar & Maria Jose Boccardi & Mark Dean, 2015. "Satisficing and Stochastic Choice," Working Papers 2015-8, Brown University, Department of Economics.

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