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Whether or not to open Pandora's box

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  • 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
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    References listed on IDEAS

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    More about this item

    Keywords

    Search; Information acquisition;

    JEL classification:

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

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