On the Importance of Context in Sequential Search

Yu‐Chin Hsiao, Simon Kemp and Maroš Servátka

Southern Economic Journal, 2020, vol. 86, issue 4, 1510-1530

Abstract: We experimentally investigate whether framing an individual‐choice decision in a market setting results in a different outcome than when the decision is described in a context‐free frame. We further explore whether the context effect is triggered solely by the frame or whether a richer descriptive content is required to establish familiarity with the decision‐making environment. Understanding what constitutes context is central to formulating practical recommendations aiming to improve the quality of individual decisions. Our results show that framing a sequential search problem as selling houses leads to better decisions than a context‐free frame. Manipulating whether or not the framed decision‐making scenario includes a description of the house, which would be naturally available in a real estate market, does not impact the length of search or the value of accepted offers.

Date: 2020
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https://doi.org/10.1002/soej.12422

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Working Paper: On the Importance of Context in Sequential Search (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:86:y:2020:i:4:p:1510-1530

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