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Search from an unkown distribution an explicit solution

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  • Talmain, Gabriel

Abstract

This paper derives the optimal strategy of a searcher who searches with recall from an unknown distribution and who holds Dirichlet beliefs. Providing his priors are accurate, this searcher will immediately accept an offer which would have terminated his search had he known for sure the distribution, but if unlucky he may eventually accept a lower wage. In the latter case, as he accumulates more experience, he is increasingly reluctant to do so. This paper also explains why some workers become discouraged.

Suggested Citation

  • Talmain, Gabriel, 1992. "Search from an unkown distribution an explicit solution," Journal of Economic Theory, Elsevier, vol. 57(1), pages 141-157.
    • Handle: RePEc:eee:jetheo:v:57:y:1992:i:1:p:141-157
    DOI: 10.1016/S0022-0531(05)80045-6
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    References listed on IDEAS

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    1. Rothschild, Michael, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 689-711, July/Aug..
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    8. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
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    11. Michael Rothschild, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown: A Summary," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 1, pages 293-294, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ed Hopkins, "undated". "Price Dispersion: An Evolutionary Approach," Discussion Papers 1996-3, Edinburgh School of Economics, University of Edinburgh.
    2. Sergei Koulayev, 2008. "Estimating search with learning," Working Papers 08-29, NET Institute, revised Oct 2008.

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