On the importance of context in sequential search

Yu-Chin HSIAO, Simon KEMP, Maroš SERVÁTKA*

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)

1 Scopus Citations

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 solely by the frame 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 value of accepted offers.

Original languageEnglish
Pages (from-to)1510-1530
Number of pages21
JournalSouthern Economic Journal
Volume86
Issue number4
Early online date21 Jan 2020
DOIs
Publication statusPublished - Apr 2020
Externally publishedYes

Bibliographical note

This article is based on Yu‐Chin Hsiao's dissertation chapter written jointly at the University of Canterbury and Macquarie Graduate School of Management. Financial support was provided by the University of Canterbury, College of Business and Economics, and Macquarie Graduate School of Management.

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