Search with multiple attributes: Theory and empirics

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Title: Search with multiple attributes: Theory and empirics
Authors: Sanjurjo, Adam
Research Group/s: Microeconomía Aplicada (GIMA)
Center, Department or Service: Universidad de Alicante. Departamento de Fundamentos del Análisis Económico
Keywords: Search theory | Optimal sequential search | Multiple attributes | Procedural cognition | Bounded rationality | Working memory capacity
Knowledge Area: Fundamentos del Análisis Económico
Issue Date: Jul-2017
Publisher: Elsevier
Citation: Games and Economic Behavior. 2017, 104: 535-562. doi:10.1016/j.geb.2017.05.009
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. Nevertheless, while single attribute search problems have been studied extensively, little is known about optimal search in multiple attribute environments. I introduce a partial characterization of optimal sequential search in a problem with multiple searchable attributes and alternatives, no order restrictions on search, and full recall. Upon applying the partial rational benchmark to a rich dataset I find that subjects systematically deviate from optimal sequential search by: (1) searching too deeply within alternatives and (2) switching too adjacently between alternatives. I explore how these deviations affect payoffs, and discuss why they may be boundedly rational.
Sponsor: Financial support from the Spanish Ministerio de Ciencia y Tecnología and Feder Funds (SEJ-2007-62656), and the Spanish Ministry of Economics and Competition (ECO2012-34928) is gratefully acknowledged.
ISSN: 0899-8256 (Print) | 1090-2473 (Online)
DOI: 10.1016/j.geb.2017.05.009
Language: eng
Type: info:eu-repo/semantics/article
Rights: © 2017 Elsevier Inc.
Peer Review: si
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Appears in Collections:INV - GIMA - Artículos de Revistas

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