Search and satisficing

Andrew Caplin, Mark Dean, Daniel Martin

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Many everyday decisions are made without full examination of all available options, and, as a result, the best available option may be missed. We develop a search-theoretic choice experiment to study the impact of incomplete consideration on the quality of choices. We find that many decisions can be understood using the satisficing model of Herbert Simon (1955): most subjects search sequentially, stopping when a "satisficing" level of reservation utility is realized. We find that reservation utilities and search order respond systematically to changes in the decision making environment.

    Original languageEnglish (US)
    Pages (from-to)2899-2922
    Number of pages24
    JournalAmerican Economic Review
    Volume101
    Issue number7
    DOIs
    StatePublished - Dec 2011

    ASJC Scopus subject areas

    • Economics and Econometrics

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