We introduce subjective expectations about the labour market into a job search model. We show how biases in expectations over the wage distribution affect optimal search intensity and the duration of unemployment. Optimistic individuals search more but reject more offers, with an ambiguous effect on unemployment duration. Based on extensive survey data from Germany, we confirm previous evidence that the unemployed are overly optimistic. We show how the simple search model with subjective wage expectations can be empirically estimated using panel data including information on expectations. Estimation is work in progress.