Quasi-rational search under incomplete information: some evidence from experiments

Butler, D.J. and Loomes, G.C. (1997) Quasi-rational search under incomplete information: some evidence from experiments. The Manchester School, 65 (2). pp. 127-144.

Abstract

This paper presents an aspiration-satisficing model of consumer search under limited information where no optimal strategy is defined. The model is contrasted with the Hey (Journal of Economic Behaviour and Organization (1982), Vol. 3, No. 1, pp. 65–81; (1987), Vol. 8, No. 2, pp. 137–144) ``bounce rules''. Experimental evidence is presented which, in this environment, lends support for the former explanation over the latter. In particular, the order in which price quotes were received was not accorded significance. These contrasting results suggest that subjects may utilize rules of varying degrees of sophistication depending on the costs and expected benefits attached to their use in different informational environments. A simpler version of the aspiration-satisficing model is then developed that produces an ``order effect''.