This paper presents a unified model of consumer search when both prices and qualities are uncertain. It is assumed that price can be observed prior to purchase but that quality can be observed only after purchase and experience. This two-stage decision problem is of particular interest since, in practice, there is usually some connection between quality and price. Of the many interesting implications of this dependence explored in this paper is the result that the usual "reservation-price rule" may no longer be optimal; indeed, the optimal stopping set may take one of several alternative (and more realistic) forms.

A number of generalizations of the expected utility preference functional are estimated using experimentally generated data involving 100 pairwise choice questions repeated on two separate occasions. Likelihood ratio tests are conducted to investigate the statistical superiority of the various generalizations and the Akaike information criterion is used to distinguish between them. The economic superiority of the various generalizations is also explored and the paper concludes that, for many subjects, the superiority of several of the generalizations is not established.

John D. Hey, Peter J. Lambert; Relative Deprivation and the Gini Coefficient: Comment, The Quarterly Journal of Economics, Volume 95, Issue 3, 1 November 1980,

This paper presents a unified model of consumer search when both prices and qualities are uncertain. It is assumed that price can be observed prior to purchase but that quality can be observed only after purchase and experience. This two-stage decision problem is of particular interest since, in practice, there is usually some connection between quality and price. Of the many interesting implications of this dependence explored in this paper is the result that the usual "reservation-price rule" may no longer be optimal; indeed, the optimal stopping set may take one of several alternative (and more realistic) forms.