Real-Time Search in the Laboratory and the Market

Meta Brown, Christopher Flinn and Andrew Schotter

No 135, Carlo Alberto Notebooks from Collegio Carlo Alberto

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

Keywords: Job Search; Reservation Wage; Experiment (search for similar items in EconPapers)
JEL-codes: C91 J64 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Real-Time Search in the Laboratory and the Market (2011)
Working Paper: Real-time search in the laboratory and the market (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:135

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