Aspiration formation and satisficing in isolated and competitive search

Werner Güth (), Ev Martin () and Torsten Weiland ()

Discussion Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: We experimentally explore individual and interactive decision making in a sequential search task and test whether generally accepted principles of bounded rationality (aspiration formation, satisficing, and aspiration adjustment) adequately explain the observed search behavior. Subjects can, at a cost, employ screening and selection methods facilitating their search and revealing their aspirations. The majority of subjects seems to follow the single threshold heuristic after extensive experimentation. Contrary to popular theories of sequential search, aspiration levels are set below the maximum value of all previously inspected alternatives. In a competitive search subjects tend to experiment less before engaging in satisficing and generally state lower aspirations. Finally, systematic satisficing seems to significantly enhance payoffs.

Keywords: sequential search; secretary problem; optimal stopping; bounded rationality (search for similar items in EconPapers)
JEL-codes: C44 C61 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-exp
Date: 2006-11
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