Consumer Search: Not Enough or Too Much?

Hong Kong University of Science & Technology Marketing Working Paper

41 Pages Posted: 11 Dec 2001

See all articles by Rami Zwick

Rami Zwick

University of California, Riverside

Amnon Rapoport

University of Arizona - Eller College of Management

Alison King Lo

Massachusetts Institute of Technology (MIT) - Sloan School of Management; Duke University - Graduate School

A. V. Muthukrishnan

Hong Kong University of Science & Technology (HKUST) - Department of Marketing

Date Written: September 20, 2001

Abstract

We study search behavior in a generalized "secretary problem" environment in which consumers search sequentially for the best alternative from a known and finite set of multi-attribute alternatives. In contrast to most previous studies, we make no distributional assumptions about the quality of the alternatives. Rather, at each stage of the search the consumers are only assumed to be able to rank order the alternatives they have already inspected in terms of their overall quality. Our study departs from previous experimental investigations of the secretary problem by including search costs and allowing for recall (backward solicitation) of previously inspected alternatives. Both the number of alternatives and the cost of searching are manipulated experimentally in a factorial design. In the no-cost condition, we find that subjects do not search enough, whereas in the cost condition they search too much. We propose a simple behavioral decision model that incorporates both local and global patterns of the sequence - patterns that should have been ignored by a rational consumer - and then show that it can account for the major patterns of the observed results.

Keywords: Search Behavior, Sequential Choice Models, Information Processing

JEL Classification: D81, D83, C91, C44

Suggested Citation

Zwick, Rami and Rapoport, Amnon and Lo, Alison King and Muthukrishnan, A. V., Consumer Search: Not Enough or Too Much? (September 20, 2001). Hong Kong University of Science & Technology Marketing Working Paper, Available at SSRN: https://ssrn.com/abstract=287802 or http://dx.doi.org/10.2139/ssrn.287802

Rami Zwick (Contact Author)

University of California, Riverside ( email )

900 University Avenue
Riverside, CA 92521
United States

Amnon Rapoport

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-9325 (Phone)
520-621-4171 (Fax)

Alison King Lo

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States
617-519-4088 (Phone)

Duke University - Graduate School ( email )

Durham, NC 27708-0097
United States

A. V. Muthukrishnan

Hong Kong University of Science & Technology (HKUST) - Department of Marketing ( email )

Department of Marketing
Clear Water Bay, Kowloon
Hong Kong
+852 2358 7715 (Phone)
+852 2358 2429 (Fax)

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