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A two-agent model of sequential search and choice

Mauring, E; (2016) A two-agent model of sequential search and choice. Journal of Economic Behavior & Organization , 123 pp. 122-137. 10.1016/j.jebo.2015.12.010. Green open access

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Abstract

This paper extends the standard sequential search model by allowing the agent who compiles the choice set via search (the “searcher”) to differ from the agent who chooses from the set (the “chooser”). I show for a general joint distribution of the agents’ preferences that the searcher's optimal policy is a threshold rule. In contrast to the standard model, the threshold is weakly decreasing in time (i.e., exhibits the “discouragement effect”), although the search horizon is infinite and the search environment stationary. I characterise the threshold and discuss the testable implications of the discouragement effect. The characteristics of my model differ from two single-agent search models that feature a time-varying threshold (convex search costs or deadline). In particular, my model features a threshold that decreases endogenously over time and never generates return to an item rejected earlier, in contrast to the other models.

Type: Article
Title: A two-agent model of sequential search and choice
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jebo.2015.12.010
Publisher version: http://dx.doi.org/10.1016/j.jebo.2015.12.010
Language: English
Additional information: Copyright © 2016. This manuscript version is published under a Creative Commons Attribution Non-commercial Non-derivative 4.0 International licence (CC BY-NC-ND 4.0). This licence allows you to share, copy, distribute and transmit the work for personal and non-commercial use providing author and publisher attribution is clearly stated. Further details about CC BY licences are available at http://creativecommons.org/licenses/by/4.0.
Keywords: Sequential search; Multi-agent search; Threshold policy; Discouragement effect
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/1489671
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