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A theory of search with deadlines and uncertain recall

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Author Info

  • S. Nuray Akin

    (Department of Economics, University of Miami)

  • Brennan Platt

    (Department of Economics, Brigham Young University)

Abstract

We analyze an equilibrium search model where buyers seek to purchase a good before a deadline 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 his quote history, and hence post prices that weigh the probability of sale versus the profit once sold. The model's equilibrium can take one of three forms. In a late equilibrium, buyers initially forgo purchases, preferring to wait until the deadline. In an early equilibrium, any equilibrium offer is accepted as soon as it is received. In a full equilibrium, higher prices are turned down until near the deadline, while lower prices are immediately accepted. Equilibrium price and sales dynamics are determined by the time remaining until the deadline and the quote history of the consumer.

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File URL: http://bus.miami.edu/_assets/files/WP2012-03.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2012-3.

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Length: 40 pages
Date of creation: 12 Jan 2012
Date of revision:
Publication status: Forthcoming: Under Review
Handle: RePEc:mia:wpaper:2012-3

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Related research

Keywords: Equilibrium Search; Deadlines; Uncertain Recall; Price Posting; Reservation Prices;

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References

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  1. Landsberger, Michael & Peled, Dan, 1977. "Duration of offers, price structure, and the gain from search," Journal of Economic Theory, Elsevier, vol. 16(1), pages 17-37, October.
  2. Ma, Ching-To Albert & Manove, Michael, 1993. "Bargaining with Deadlines and Imperfect Player Control," Econometrica, Econometric Society, vol. 61(6), pages 1313-39, November.
  3. Armstrong, Mark & Zhou, Jidong, 2010. "Conditioning prices on search behaviour," MPRA Paper 19985, University Library of Munich, Germany.
  4. James Albrecht & Axel Anderson & Eric Smith & Susan Vroman, 2007. "Opportunistic Matching In The Housing Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 641-664, 05.
  5. Adam Copeland & Wendy Dunn & George Hall, 2011. "Inventories and the automobile market," RAND Journal of Economics, RAND Corporation, vol. 42(1), pages 121-149, 03.
  6. Wilde, Louis L & Schwartz, Alan, 1979. "Equilibrium Comparison Shopping," Review of Economic Studies, Wiley Blackwell, vol. 46(3), pages 543-53, July.
  7. S. Nuray Akin & Brennan C. Platt, 2011. "Searching on a Deadline," Working Papers 2011-11, University of Miami, Department of Economics.
  8. Andrew F. Daughety & Jennifer F. Reinganum, 1992. "Search Equilibrium with Endogenous Recall," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 184-202, Summer.
  9. Lee Sang-Yong T. & Png Ivan P.L., 2004. "Buyer Shopping Costs and Retail Pricing: An Indirect Empirical Test," Review of Marketing Science, De Gruyter, vol. 2(1), pages 1-22, July.
  10. S. Nuray Akin & Brennan Platt, 2012. "Running Out of Time: Limited Unemployment Benefits and Reservation Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 149-170, April.
  11. Andrzej Skrzypacz & William Fuchs, 2009. "Bargaining with Deadlines," 2009 Meeting Papers 159, Society for Economic Dynamics.
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Blog mentions

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  1. 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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