On the Importance of Context in Sequential Decision-Making

Yu Chin Hsiao, Simon Kemp and Maroš Servátka

MPRA Paper from University Library of Munich, Germany

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 by the frame itself 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 total earnings.

Keywords: Schema Activation; Secretary Problem; Sequential Search; Context; Framing; Decision-Making (search for similar items in EconPapers)
JEL-codes: C91 D83 (search for similar items in EconPapers)
Date: 2019-05-03
New Economics Papers: this item is included in nep-cbe and nep-exp
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https://mpra.ub.uni-muenchen.de/96872/1/MPRA_paper_96872.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:94027

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