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Learning while shopping: an experimental investigation into the effect of learning on consumer search

Published online by Cambridge University Press:  14 March 2025

Ben Casner*
Affiliation:
The Ohio State University, 410 Arps Hall, 1945 N. High St., Columbus, OH 43210, USA

Abstract

In many search environments, searchers are learning about the distribution of offers in the market. I conduct an experiment exploring a broad class of search problems with learning about the distribution of payoffs. My results support the prediction that learning results in declining reservation values, providing evidence that learning may be an explanation for recall. Theory predicts a “one step” reservation value strategy, but many subjects instead choose to set a high reservation value in order to learn about the distribution before adjusting based on their observations. Under-searching in search experiments may stem from a reinforcement heuristic and lack of negative feedback after using sub-optimal strategies.

Type
Original Paper
Copyright
Copyright © 2020 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-020-09659-7) contains supplementary material, which is available to authorized users.

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Online Appendix: Subject instructions for Learning While Shopping
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