Description:
In traditional sequential search models, players face ex ante uncertainty prior to each search but obtain certain outcomes after the search. The players' reservation value tends to decrease with their level of risk aversion. We propose a modified sequential search model with ex post uncertainty in which the uncertainty cannot be fully eliminated by the search. In this scenario, risk-averse players tend to increase their reservation value and extend their search duration. We also test our theory in a laboratory experiment with a search game to track subjects' behavior and use a multiple price list and a bomb risk elicitation task to elicit subjects' risk preferences. The experimental results verify our theoretical predictions