Real-Time Search in the Laboratory and the Market

Meta Brown, Christopher Flinn and Andrew Schotter

American Economic Review, 2011, vol. 101, issue 2, 948-74

Abstract: While widely accepted labor market search models imply a constant reservation wage policy, empirical evidence strongly suggests that reservation wages decline in search duration. This paper reports the results of the first real-time-search laboratory experiment. The controlled environment subjects face is stationary, and the payoff-maximizing reservation wage is constant. Nevertheless, subjects' reservation wages decline sharply over time. We investigate two hypotheses to explain this decline: 1. Searchers respond to the stock of accruing search costs. 2. Searchers experience non-stationary subjective costs of time spent searching. Our data support the latter hypothesis, and we substantiate this conclusion both experimentally and econometrically. (JEL C91, D83, J64)

Date: 2011
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Citations: View citations in EconPapers (41)

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Working Paper: Real-Time Search in the Laboratory and the Market (2009)
Working Paper: Real-time search in the laboratory and the market (2009)
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