Sequential search by groups with rank-dependent payoffs: An experimental study
Published on Jul 1, 2014in Organizational Behavior and Human Decision Processes2.908
· DOI :10.1016/j.obhdp.2014.03.004
In many sequential search situations, decisions are reached by groups. We examine behavior in such situations experimentally using an extension of the “secretary problem”. In our setup, group members (players) with non-aligned preferences inspect alternatives or “applicants” one at a time with no backward solicitation. A minimal information structure is assumed where players are only informed of the relative ranks of the alternatives as they inspect them sequentially. We present the equilibrium solution, and then use it as a benchmark for our analysis. We report the results from a controlled experiment showing that subjects over-searched relative to equilibrium. Decisions were affected by theoretically irrelevant observations including the relative rank of the previous alternative and the other player’s relative rank of the current alternative. For managers engaged in committee sequential search tasks, our findings highlight the importance of being aware to reach compromises early on, among other implications.