Time Pressure and Regret in Sequential Search

Notions of perceived urgency and regret are common in many markets. Sellers pressure buyers with time-limited offers and emphasize regret about forgone purchasing opportunities, job seekers face deadlines and anticipate (or experience) regret when rejecting offers, and investors regret forgone selling or buying opportunities when facing rapid price changes. Hence, both regret and urgency may play a crucial role for decision making in many economic search processes. We investigate the effects of regret and perceived urgency in a pre-registered, well-powered, and theory-based sequential search experiment. Extending a simple search model we show that regret can theoretically explain why individuals often search too little and hypothesize that urgency may mitigate potential effects of (anticipated) regret. In the experiment, we vary perceived urgency and (anticipated) regret exogenously in a 2x2 between subjects design. Although perceived urgency reduces decision times, overall differences in search behavior across treatments are minor. Neither anticipated regret, nor urgency affect search length. Only very inexperienced decision makers fall prey to being pressured.

[Preregistered in the AEA Registry #0004065] [https://doi.org/10.1257/rct.4065-1.0]

This project is a cooperation between the sub-projects A04 and B04 of the collaborative research center  “Sonderforschungsbereich/Transregio 190 Rationality and Competition” funded by the Deutsche Forschungsgemeinschaft (DFG).