Abstract
The objective of this study is to design a laboratory experiment to explore the effect of ambiguity on a subject’s search behavior in a finite-horizon sequential search model. In so doing, we employ a strategy to observe the potential trend of reservation points that is usually unobserved. We observe that subjects behaving consistently across treatments reduce their reservation points in the face of ambiguity over point distribution. Our result is consistent with the theoretical implication obtained by Nishimura and Ozaki (J Econ Theory 119:299–333, 2004).
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Notes
In this paper, the two terms Knightian uncertainty and ambiguity are used interchangeably. For a survey, see Etner et al. (2012).
Cox and Oaxaca (2000) conduct laboratory experiments of job search under unknown distributions, but they only investigate the impact on search durations. In the context of ambiguity other than in job search models, see Attansi et al. (2014), Brunette et al. (2014), Chen et al. (2007), Cohn et al. (2011), Della Seta et al. (2014), Eichberger et al. (2008), Hayashi and Wada (2010), and Viefers (2012).
In our experiment, we use “point” to prevent subjects from associating “wage” with their actual job search activity.
We use the exchange rate of JPY 118.53 to USD 1 for January 10, 2015.
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Acknowledgments
The authors are grateful to Associate Editor for his/her detailed comments and suggestions that have improved this paper substantially. The authors also thank Takanori Adachi, Keiko Aoki, Yasuyo Hamaguchi, Youichiro Higashi, Yoichi Hizen, Chiang Hui-Yu, and Keisuke Kawata and the participants in the JEA Meeting, the EPA Meeting, and Xiamen University conference. Financial support from the Zengin Foundation for Studies on Economics and Finance, MEXT (No. 23000001, 23530275, and 26380240), GCOE and the ISER grant (Osaka University) the Joint Research Program of KIER are gratefully acknowledged. Okudaira acknowledges a grant from JSPS Postdoctoral Fellowship for Research Abroad. All errors are our responsibility.
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Asano, T., Okudaira, H. & Sasaki, M. An experimental test of a search model under ambiguity. Theory Decis 79, 627–637 (2015). https://doi.org/10.1007/s11238-015-9488-x
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DOI: https://doi.org/10.1007/s11238-015-9488-x