ICES Seminar in Experimental Economics and Game Theory

Choosing to search: Choice with a default option

Friday, April 12, 2024 12:00 PM to 1:00 PM EDT
Vernon Smith Hall (formerly Metropolitan Building), 5183

ICES Seminar in Experimental Economics and Game Theory

 

The ICES Seminar in Experimental Economics and Game Theory of the Spring 2024 semester will feature:

Ian Chadd

Rensselaer Polytechnic Institute

Choosing to search: Choice with a default option

 

 

Abstract

In the presence of a default option, the optimal search rule for an agent with a reference-dependent utility and a search cost predicts: (i) the default increases the reservation utility due to the reference effect, leading to a better choice, and (ii) those with higher reservation utility will self-select into search and are more likely to find a superior option. Our experiments document the presence of both effects. Those who reject the default are likely to find higher-ranked options in their active search, supporting the self-selection effect. Even when the self-selection channel is shut down, the reference effect remains.

 

For more information about the Seminar Series, please visit the Seminar Schedule homepage.

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