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On the Importance of Context in Sequential Search

Author

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  • Hsiao, Yu Chin
  • Kemp, Simon
  • Servátka, Maroš

Abstract

We experimentally investigate whether framing an individual-choice decision in a market setting results in a different outcome than when the decision is described in a context-free frame. We further explore whether the context effect is triggered solely by the frame or whether a richer descriptive content is required to establish familiarity with the decision-making environment. Understanding what constitutes context is central to formulating practical recommendations aiming to improve the quality of individual decisions. Our results show that framing a sequential search problem as selling houses leads to better decisions than a context-free frame. Manipulating whether or not the framed decision-making scenario includes a description of the house, which would be naturally available in a real estate market, does not impact the length of search or the value of accepted offers.

Suggested Citation

  • Hsiao, Yu Chin & Kemp, Simon & Servátka, Maroš, 2019. "On the Importance of Context in Sequential Search," MPRA Paper 97284, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:97284
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    File URL: https://mpra.ub.uni-muenchen.de/97284/1/MPRA_paper_97284.pdf
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    More about this item

    Keywords

    Schema Activation; Secretary Problem; Sequential Search; Context; Framing; Decision-Making;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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