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The relationship between risk attitudes and heuristics in search tasks: A laboratory experiment

Listed author(s):
  • Schunk, Daniel
  • Winter, Joachim

Experimental studies of search behavior suggest that individuals stop searching earlier than the optimal, risk-neutral stopping rule predicts. Two different classes of decision rules could generate this behavior: rules that are optimal conditional on utility functions departing from risk neutrality, or heuristics derived from limited cognitive processing capacities and satisficing. To discriminate between these possibilities, we conducted an experiment that consists of a search task as well as a lottery task designed to elicit utility functions. We find that search heuristics are not related to measures of risk aversion, but to measures of loss aversion.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 19880.

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Date of creation: 2009
Publication status: Published in Journal of Economic Behavior and Organization 2 71(2009): pp. 347-360
Handle: RePEc:lmu:muenar:19880
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