Real-time search in the laboratory and the market

Meta Brown, Christopher Flinn and Andrew Schotter

No 410, Staff Reports from Federal Reserve Bank of New York

Abstract: While widely accepted models of labor market search imply a constant reservation wage policy, the empirical evidence strongly suggests that reservation wages decline in the duration of search. 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 wages 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; consumer search; reservation wage; experiment (search for similar items in EconPapers)
JEL-codes: C91 J64 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cbe, nep-dge, nep-exp and nep-lab
Note: For a published version of this report, see Meta Brown, Christopher J. Flinn, and Andrew Schotter, "Real-Time Search in the Laboratory and the Market," American Economic Review 101, no. 2 (April 2011): 948-74.
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr410.html (text/html)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr410.pdf (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:410

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().