Search, Memory, and Choice Error: An Experiment

Abstract

Multiple attribute search is a central feature of economic life: we consider much more than price when purchasing a home, and more than wage when choosing a job. An experiment is conducted in order to explore the effects of cognitive limitations on choice in these rich settings, in accordance with the predictions of a new model of search memory load. In each task, subjects are made to search the same information in one of two orders, which differ in predicted memory load. Despite standard models of choice treating such variations in order of acquisition as irrelevant, lower predicted memory load search orders are found to lead to substantially fewer choice errors. An implication of the result for search behavior, more generally, is that in order to reduce memory load (thus choice error) a limited memory searcher ought to deviate from the search path of an unlimited memory searcher in predictable ways-a mechanism that can explain the systematic deviations from optimal sequential search that have recently been discovered in peoples' behavior. Further, as cognitive load is induced endogenously (within the task), and found to affect choice behavior, this result contributes to the cognitive load literature (in which load is induced exogenously), as well as the cognitive ability literature (in which cognitive ability is measured in a separate task). In addition, while the information overload literature has focused on the detrimental effects of the quantity of information on choice, this result suggests that, holding quantity constant, the order that information is observed in is an essential determinant of choice failure.