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Pandora’s rules in the laboratory

Published online by Cambridge University Press:  14 March 2025

Efthymios Lykopoulos,
Georgios Voucharas and
Dimitrios Xefteris
Efthymios Lykopoulos*
Affiliation:
Department of Economics, University of Cyprus, PO Box 20537, 1678 Nicosia, Cyprus
Georgios Voucharas*
Affiliation:
Department of Economics, University of Macedonia, Thessaloniki, Greece
Dimitrios Xefteris*
Affiliation:
Department of Economics, University of Cyprus, PO Box 20537, 1678 Nicosia, Cyprus
*
lykopoulos.efthymios@ucy.ac.cy
g.voucharas@uom.edu.gr
xefteris.dimitrios@ucy.ac.cy
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Abstract

In theory, search conditions are a key determinant of Pandora’s rule (i.e. of the optimal search pattern), and of the eventual payoffs (Weitzman, 1979; Doval, 2018). We compare different search conditions in the laboratory and find strong evidence that they affect subjects’ order of inspection and payoffs greatly. Subjects are more conservative at the beginning of the search, and earn less if they are constrained to choose only among the inspected alternatives, than if they are not. These findings reinforce the empirical pertinence of the formal search literature, and generate novel insights regarding relevant settings of applied interest (e.g. the impact of market digitization on consumer behavior).

Keywords

Pandora’s ruleLaboratory experimentWeitzmanSearch

JEL classification

C91: Laboratory, Individual BehaviorD81: Criteria for Decision-Making under Risk and UncertaintyD83: Search • Learning • Information and Knowledge • Communication • Belief • Unawareness

Information

Type
Original Paper
Information
Experimental Economics , Volume 25 , Issue 5 , December 2022, pp. 1492 - 1514
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2022.

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Footnotes

Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-022-09770-x.

We thank Laura Doval, Philippos Louis, two anonymous reviewers and the editor, John Duffy, for their valuable feedback and advice. This project has received funding from the University of Cyprus (Dimitrios Xefteris) under the IMVASY research grant. The replication material for the study is available at https://doi.org/10.7910/DVN/RE8SJN.

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