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Learning while shopping: an experimental investigation into the effect of learning on consumer search

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  • Ben Casner

    (The Ohio State University)

Abstract

In many search environments, searchers are learning about the distribution of offers in the market. I conduct an experiment exploring a broad class of search problems with learning about the distribution of payoffs. My results support the prediction that learning results in declining reservation values, providing evidence that learning may be an explanation for recall. Theory predicts a “one step” reservation value strategy, but many subjects instead choose to set a high reservation value in order to learn about the distribution before adjusting based on their observations. Under-searching in search experiments may stem from a reinforcement heuristic and lack of negative feedback after using sub-optimal strategies.

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  • Ben Casner, 2021. "Learning while shopping: an experimental investigation into the effect of learning on consumer search," Experimental Economics, Springer;Economic Science Association, vol. 24(1), pages 238-273, March.
    • Handle: RePEc:kap:expeco:v:24:y:2021:i:1:d:10.1007_s10683-020-09659-7
    DOI: 10.1007/s10683-020-09659-7
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    Cited by:

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    3. Yuta Kittaka & Ryo Mikami & Natsumi Shimada, 2021. "Passive or Active? Behavioral changes in different designs of search experiments," ISER Discussion Paper 1148, Institute of Social and Economic Research, Osaka University.
    4. Horváth, Gergely, 2023. "Peer effects through receiving advice in job search: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 494-519.
    5. Karle, Heiko & Kerzenmacher, Florian & Schumacher, Heiner & Verboven, Frank, 2022. "Search Costs and Diminishing Sensitivity," CEPR Discussion Papers 17399, C.E.P.R. Discussion Papers.
    6. Yuta Kittaka & Ryo Mikami & Natsumi Shimada, 2021. "Behavioral changes in different designs of search experiments," ISER Discussion Paper 1148r, Institute of Social and Economic Research, Osaka University, revised Jun 2022.
    7. Efthymios Lykopoulos & Georgios Voucharas & Dimitrios Xefteris, 2022. "Pandora’s rules in the laboratory," Experimental Economics, Springer;Economic Science Association, vol. 25(5), pages 1492-1514, November.

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    More about this item

    Keywords

    Search; Learning; Information heuristics; Search experiments; Unknown distribution; Reinforcement heuristic;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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