A Satisficing Choice Model

While the assumption of utility-maximizing consumers has been challenged for decades, empirical applications of alternative choice rules are still very recent. We add to this growing body of literature by proposing a model based on Simon’s idea of a “satisficing” decision maker. In contrast to previous models (including recent models implementing alternative choice rules), satisficing depends on the order in which alternatives are evaluated. We therefore conduct a visual conjoint experiment to collect search and choice data. We model search and choice jointly and allow for interdependence between them. The choice rule incorporates a conjunctive rule and, contrary to most previous models, does not rely on compensatory tradeoffs at all. The results strongly support the proposed model. For instance, we find that search is indeed influenced by product evaluations. More importantly, the model results strongly support the satisficing stopping rule. Finally, we perform a holdout prediction task and find that the proposed model outperforms a standard multinomial logit model.