A theory of search with deadlines and uncertain recall
AbstractWe ask how the ability to recall past prices affects the dynamics of search and price formation. In the model, buyers have limited time to purchase a good and face uncertainty regarding the availability of past price quotes in the future. Sellers cannot observe a potential buyer’s remaining time until deadline nor her quote history, and hence post prices that weigh the probability of sale versus the profit once sold. We find that, in contrast to conventional wisdom, reducing the consumer’s recall ability may actually improve his expected utility because it lowers the average expected price in the market and reduces the duration of search. Copyright Springer-Verlag Berlin Heidelberg 2014
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 55 (2014)
Issue (Month): 1 (January)
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Other versions of this item:
- S. Nuray Akin & Brennan Platt, 2012. "A theory of search with deadlines and uncertain recall," Working Papers 2012-3, University of Miami, Department of Economics.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- A theory of search with deadlines and uncertain recall
by Christian Zimmermann in NEP-DGE blog on 2012-07-15 16:31:25
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