Search, choice, and revealed preference

Andrew Caplin, Mark Dean

    Research output: Contribution to journalArticle

    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 nonstandard 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.

    Original languageEnglish (US)
    Pages (from-to)19-48
    Number of pages30
    JournalTheoretical Economics
    Volume6
    Issue number1
    DOIs
    StatePublished - Jan 1 2011

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    Keywords

    • Bounded rationality
    • Decision time
    • Framing effects
    • Incomplete information
    • Revealed preference
    • Search theory
    • Status quo bias
    • Stochastic choice

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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