Heuristics for Sequential Search

The heuristics discussed so far for choosing one option from many operate with the assumption that all the possible options (e.g., cities to choose between) are presently available to the decision maker. In many real-world choice problems, though, an agent encounters options in a sequence spread out over time. The options typically appear in random order and are drawn from a distribution with parameters that are only partially known in advance. In this case, the search for possible options, rather than just for information about those already present, becomes central.

The traditional normative approach to such problems is to search until one finds an option below a precalculated reservation price that balances the expected benefit of further search against its cost; this requires full knowledge of the search costs and the distribution of available alternatives. Heuristics that simplify the reservation price calculation (by replacing an integral with a weighted sum) can come very close to normative performance (e.g., at selecting good prices during a shopping trip to several stores). Other heuristics require less knowledge, such as ''Keep searching until the total search cost exceeds 7.5% of the best price found.'' Herbert Simon's bounded rationality principle of satisficing suggests setting an aspiration level equal to an alternative that is good enough for the decision maker's needs (rather than optimal) and searching until that aspiration is met. Exactly how the aspiration level can be set varies with the search setting (e.g., whether it is a one-sided search such as shopping or a two-sided mutual search such as finding a mate). Finally, another type of search heuristic that people use stops search after a particular pattern of alternatives is encountered rather than after some threshold is exceeded (despite the fact that pattern should not matter from a normative perspective). For instance, the ''one-bounce'' and ''two-bounce'' rules state that one should keep searching for a low price until prices go up for the last or two last alternatives, respectively.

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