IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v175y2018icp127-158.html
   My bibliography  Save this article

Whether or not to open Pandora's box

Author

Listed:
  • Doval, Laura

Abstract

I study a single-agent sequential search problem as in Weitzman (1979). Contrary to Weitzman, conditional on stopping, the agent may take any uninspected box without first inspecting its contents. This introduces a new trade-off. By taking a box without inspection, the agent saves on its inspection costs. However, by inspecting it, he may discover that its contents are lower than he anticipated. I identify sufficient conditions on the parameters of the environment under which I characterize the optimal policy. Both the order in which boxes are inspected and the stopping rule may differ from that in Weitzman's model. Moreover, I provide additional results that partially characterize the optimal policy when these conditions fail.

Suggested Citation

  • Doval, Laura, 2018. "Whether or not to open Pandora's box," Journal of Economic Theory, Elsevier, vol. 175(C), pages 127-158.
    • Handle: RePEc:eee:jetheo:v:175:y:2018:i:c:p:127-158
    DOI: 10.1016/j.jet.2018.01.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053118300073
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2018.01.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hao Li & Xianwen Shi, 2017. "Discriminatory Information Disclosure," American Economic Review, American Economic Association, vol. 107(11), pages 3363-3385, November.
    2. Geoffroy de Clippel & Kfir Eliaz & Kareen Rozen, 2014. "Competing for Consumer Inattention," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1203-1234.
    3. Weitzman, Martin L, 1979. "Optimal Search for the Best Alternative," Econometrica, Econometric Society, vol. 47(3), pages 641-654, May.
    4. Hector Chade & Lones Smith, 2006. "Simultaneous Search," Econometrica, Econometric Society, vol. 74(5), pages 1293-1307, September.
    5. Christos H. Papadimitriou & John N. Tsitsiklis, 1999. "The Complexity of Optimal Queuing Network Control," Mathematics of Operations Research, INFORMS, vol. 24(2), pages 293-305, May.
    6. Olszewski, Wojciech & Weber, Richard, 2015. "A more general Pandora rule?," Journal of Economic Theory, Elsevier, vol. 160(C), pages 429-437.
    7. Mark Armstrong & Jidong Zhou, 2016. "Search Deterrence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 26-57.
    8. Elchanan Ben-Porath & Eddie Dekel & Barton L. Lipman, 2014. "Optimal Allocation with Costly Verification," American Economic Review, American Economic Association, vol. 104(12), pages 3779-3813, December.
    9. Vishwanath, Tara, 1992. "Parallel Search for the Best Alternative," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(4), pages 495-507, October.
    10. Daniel Krähmer & Roland Strausz, 2011. "Optimal Procurement Contracts with Pre-Project Planning," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(3), pages 1015-1041.
    11. Chade, Hector & Kovrijnykh, Natalia, 2016. "Delegated information acquisition with moral hazard," Journal of Economic Theory, Elsevier, vol. 162(C), pages 55-92.
    12. Juan-JosÈ Ganuza & JosÈ S. Penalva, 2010. "Signal Orderings Based on Dispersion and the Supply of Private Information in Auctions," Econometrica, Econometric Society, vol. 78(3), pages 1007-1030, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mark Armstrong, 2017. "Ordered Consumer Search," Journal of the European Economic Association, European Economic Association, vol. 15(5), pages 989-1024.
    2. Elisabeth Honka, 2014. "Quantifying search and switching costs in the US auto insurance industry," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 847-884, December.
    3. Timothy J. Richards & Stephen F. Hamilton & Koichi Yonezawa, 2017. "Variety and the Cost of Search in Supermarket Retailing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(3), pages 263-285, May.
    4. Pak Hung Au & Mark Whitmeyer, 2018. "Attraction versus Persuasion: Information Provision in Search Markets," Papers 1802.09396, arXiv.org, revised May 2022.
    5. Karén Hovhannissian & Marco Valente, 2004. "Modeling Directed Local Search Strategies on Technology Landscapes: Depth and Breadth," ROCK Working Papers 028, Department of Computer and Management Sciences, University of Trento, Italy, revised 17 Jun 2008.
    6. Martimort, David & Arve, Malin, 2023. "Auctioning Long-Term Projects under Financial Constraints," TSE Working Papers 23-1469, Toulouse School of Economics (TSE), revised May 2024.
    7. Hector Chade & Lones Smith, 2006. "Simultaneous Search," Econometrica, Econometric Society, vol. 74(5), pages 1293-1307, September.
    8. Nigel Wadeson, 2010. "Directed search with real options," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(6), pages 569-582.
    9. Yizhaq Minchuk & Aner Sela, 2018. "Asymmetric sequential search under incomplete information," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(2), pages 315-325, June.
    10. Petrikaitė, Vaiva, 2022. "Escaping search when buying," International Journal of Industrial Organization, Elsevier, vol. 82(C).
    11. Rafael P. Greminger, 2022. "Optimal Search and Discovery," Management Science, INFORMS, vol. 68(5), pages 3904-3924, May.
    12. Jacques Crémer & Yossi Spiegel & Charles Zheng, 2009. "Auctions with costly information acquisition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 41-72, January.
    13. Maxim Ivanov, 2021. "Optimal monotone signals in Bayesian persuasion mechanisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 955-1000, October.
    14. Murali Agastya & Oleksii Birulin, 2023. "Optimal Task Scheduling under Adverse Selection and Hidden Actions," American Economic Journal: Microeconomics, American Economic Association, vol. 15(2), pages 660-698, May.
    15. Cremer, Jacques & Spiegel, Yossi & Zheng, Charles Zhoucheng, 2007. "Optimal search auctions," Journal of Economic Theory, Elsevier, vol. 134(1), pages 226-248, May.
    16. Karén Hovhannisian, 2004. "Imperfect Local Search Strategies on Technology Landscapes: Satisficing, Deliberate Experimentation and Memory Dependence," Computational Economics 0405009, University Library of Munich, Germany.
    17. Arefeva, Alina & Meng, Delong, 2021. "Revealing information in auctions: The optimal auction versus the second-price auction," Economics Letters, Elsevier, vol. 204(C).
    18. Valente Houhannisian, 2004. "Modeling Directod Local Search Strategies on Technology Landscapes and Breadth," Quaderni DISA 091, Department of Computer and Management Sciences, University of Trento, Italy, revised 17 Jun 2008.
    19. Jonas von Wangenheim, 2022. "Optimal Information Design of Online Marketplaces with Return Rights," CRC TR 224 Discussion Paper Series crctr224_2022_352v2, University of Bonn and University of Mannheim, Germany, revised Apr 2024.
    20. Adam, Klaus, 2001. "Learning While Searching for the Best Alternative," Journal of Economic Theory, Elsevier, vol. 101(1), pages 252-280, November.

    More about this item

    Keywords

    Search; Information acquisition;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:175:y:2018:i:c:p:127-158. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.