INVESTIGATIONS CONCERNING THE DYNAMICS OF CONSUMER BEHAVIOR IN UNCERTAIN ENVIRONMENTS

This paper reports the results of several experiments investigating dynamic consumer behavior. When consumers know their incomes and prices but are uncertain about their preferences, we find that they typically adopt a two‐step approach to locating optimal consumption bundles. Initially, a grid sear...

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Bibliographic Details
Published inEconomic inquiry Vol. 25; no. 4; pp. 549 - 564
Main Authors COURSEY, DON L., MASON, CHARLES F.
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.10.1987
Oxford University Press for the Western Economic Association International, etc
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Summary:This paper reports the results of several experiments investigating dynamic consumer behavior. When consumers know their incomes and prices but are uncertain about their preferences, we find that they typically adopt a two‐step approach to locating optimal consumption bundles. Initially, a grid search method is employed; this is followed by a gradient search method. An interesting phenomenon observed in many of our experiments is a tendency to consume a bundle well away from the optimum, immediately after the optimum is located. The effects of income and price changes are also studied.
Bibliography:istex:CFF132BD42615E32503CE4A923D015EE02E72A1B
ArticleID:ECIN549
ark:/67375/WNG-N228LLGD-Q
Associate Professor, School of Business, Washington University, and Assistant Professor, University of Wyoming. Subject payments made during the course of these investigations were supported by a John S. Bugas grant from the Department of Economics at the University of Wyoming. The authors wish to express their thanks to Marjorie McElroy and James Stock for helpful comments and to George Cutts and keren Radosevich for help in conducting the experiments reported herein. This paper was presented at the annual meeting of the American Economic Association in Dallas, December 1984.
ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.1987.tb00760.x