Uncertainty and Shopping Behavior: An Experimental Analysis

This paper reports experimental tests of three search equilibrium models. These models which differ only in the search strategies available to the buyers have qualitatively different predictions, that is, equilibria: price distributions, single price equilibria at the competitive price and at the monopoly price and two price equilibria. The experimental outcomes generally were consistent with the models' predictions. This suggests that debate on the utility of this class of models should shift to the realism of the models' assumptions rather than focus on their ability to characterize market outcomes. Also, since the basic models have been validated, the project of analyzing experimentally the results of relaxing some of their assumptions seems worthwhile