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Consumer Search: Not Enough Or Too Much?

Author

Listed:
  • Rami Zwick

    (The Hong Kong University of Science and Technology)

  • Amnon Rapoport

    (University of Arizona)

  • Alison King Chung Lo

    (Duke University)

  • A. V. Muthukrishnan

    (The Hong Kong University of Science and Technology)

Abstract

We study search behavior in a generalized "secretary problem" environment in which consumers search sequentially for the best alternative from a known and finite set of multi-attribute alternatives. In contrast to most previous studies, we make no distributional assumptions about the quality of the alternatives. Rather, at each stage of the search the consumers are only assumed to be able to rank order the alternatives they have already inspected in terms of their overall quality. Our study departs from previous experimental investigations of the secretary problem by including search costs and allowing for recall (backward solicitation) of previously inspected alternatives. Both the number of alternatives and the cost of searching are manipulated experimentally in a factorial design. In the no-cost condition, we find that subjects do not search enough, whereas in the cost condition they search too much. We propose a simple behavioral decision model that incorporates both local and global patterns of the sequence--patterns that should have been ignored by a rational consumer--and then show that it can account for the major patterns of the observed results.

Suggested Citation

  • Rami Zwick & Amnon Rapoport & Alison King Chung Lo & A. V. Muthukrishnan, 2001. "Consumer Search: Not Enough Or Too Much?," Experimental 0110002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpex:0110002
    Note: Type of Document - Acrobat PDF; prepared on PC; pages: 41; figures: included
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    References listed on IDEAS

    as
    1. Sonnemans, Joep, 1998. "Strategies of search," Journal of Economic Behavior & Organization, Elsevier, vol. 35(3), pages 309-332, April.
    2. Saad, Gad & Russo, J. Edward, 1996. "Stopping Criteria in Sequential Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(3), pages 258-270, September.
    3. Zwick, Rami & Rapoport, Amnon & Weg, Eythan, 2000. "Invariance failure under subgame perfectness in sequential bargaining," Journal of Economic Psychology, Elsevier, vol. 21(5), pages 517-544, October.
    4. Hey, John D., 1987. "Still searching," Journal of Economic Behavior & Organization, Elsevier, vol. 8(1), pages 137-144, March.
    5. Seale, Darryl A. & Rapoport, Amnon, 1997. "Sequential Decision Making with Relative Ranks: An Experimental Investigation of the "Secretary Problem">," Organizational Behavior and Human Decision Processes, Elsevier, vol. 69(3), pages 221-236, March.
    6. Green, Paul E & Helsen, Kristiaan & Shandler, Bruce, 1988. " Conjoint Internal Validity under Alternative Profile Presentations," Journal of Consumer Research, Oxford University Press, vol. 15(3), pages 392-397, December.
    7. Furse, David H & Punj, Girish N & Stewart, David W, 1984. " A Typology of Individual Search Strategies among Purchasers of New Automobiles," Journal of Consumer Research, Oxford University Press, vol. 10(4), pages 417-431, March.
    8. Goldman, Arieh & Johansson, J K, 1978. " Determinants of Search for Lower Prices: An Empirical Assessment of the Economics of Information Theory," Journal of Consumer Research, Oxford University Press, vol. 5(3), pages 176-186, December.
    9. Braunstein, Yale M & Schotter, Andrew, 1982. "Labor Market Search: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 20(1), pages 133-144, January.
    10. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 347-368, September.
    11. Urbany, Joel E, 1986. " An Experimental Examination of the Economics of Information," Journal of Consumer Research, Oxford University Press, vol. 13(2), pages 257-271, September.
    12. Cox, James C & Oaxaca, Ronald L, 1989. "Laboratory Experiments with a Finite-Horizon Job-Search Model," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 301-329, September.
    13. Claxton, John D & Fry, Joseph N & Portis, Bernard, 1974. " A Taxonomy of Prepurchase Information Gathering Patterns," Journal of Consumer Research, Oxford University Press, vol. 1(3), pages 35-42, December.
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    15. Schotter, Andrew & Braunstein, Yale M, 1981. "Economic Search: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 19(1), pages 1-25, January.
    16. repec:spr:grdene:v:8:y:1999:i:6:d:10.1023_a:1008616514620 is not listed on IDEAS
    17. Rami Zwick & Ching Chyi Lee, 1999. "Bargaining and Search: An Experimental Study," Experimental 9902003, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Werner Güth & Ev Martin & Torsten Weiland, 2006. "Aspiration formation and satisficing in isolated and competitive search," Papers on Strategic Interaction 2006-26, Max Planck Institute of Economics, Strategic Interaction Group.
    2. Siegfried Berninghaus & Werner Güth & M. Levati & Jianying Qiu, 2011. "Satisficing search versus aspiration adaptation in sales competition: experimental evidence," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(1), pages 179-198, February.

    More about this item

    Keywords

    search; secretary problem; Sequential Choice Models; experiment;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory

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