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The Decision to Seek or Be Sought

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  • Dorothea K. Herreiner

    (University of Bonn)

Abstract

A one-shot market with two sides is considered where everybody can be matched with at most one person. Individuals have to find trading partners on their own. Whether searching or waiting is the optimal strategy is the central question of this paper. In a market where searching and waiting are done exclusively by one market side, it is more efficient if the long market side searches. In a market where on both sides some individuals search and others stay put, there are also mixed equilibria which are even more efficient. The matching friction due to uncoordinated search by individuals implies that larger market are in general less efficient than a collection of smaller markets.

Suggested Citation

  • Dorothea K. Herreiner, 2000. "The Decision to Seek or Be Sought," Econometric Society World Congress 2000 Contributed Papers 1151, Econometric Society.
    • Handle: RePEc:ecm:wc2000:1151
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    Cited by:

    1. Shouyong Shi & Alain Delacroix, 2018. "Should Buyers or Sellers Trade in a Frictional Market?," 2018 Meeting Papers 254, Society for Economic Dynamics.
    2. Klaus Kultti & Antti Miettunen & Tuomas Takalo & Juha Virrankoski, 2009. "Who Searches?," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 152-171, June.
    3. Klaus Kultti & Antti Miettunen & Juha Virrankoski, 2006. "Physical Search," Journal of Economics, Springer, vol. 89(3), pages 223-244, December.
    4. Klaus Kultti, 2003. "About Market Structure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 240-251, January.

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