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A Simple Model of Equilibrium in Search Procedures

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  • Fershtman, Chaim
  • Rubinstein, Ariel

Abstract

The paper presents a simple game theoretic model in which players decide on the search procedures for a prize which is located in one of a labeled set of boxes. The prize is awarded to the player who finds it first. A player can decide on the number of (costly) search units he employs and the order in which he conducts the search. It is shown that in equilibrium, the players employ an equal number of search units and conduct a fully random search. The paper demonstrates that the search procedure is intrinsically inefficient in two senses: the players employ a non-optimal number of search units and they may open the same empty box twice.
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Suggested Citation

  • Fershtman, Chaim & Rubinstein, Ariel, 1997. "A Simple Model of Equilibrium in Search Procedures," Journal of Economic Theory, Elsevier, vol. 72(2), pages 432-441, February.
    • Handle: RePEc:eee:jetheo:v:72:y:1997:i:2:p:432-441
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    References listed on IDEAS

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    1. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, Oxford University Press, vol. 94(2), pages 429-436.
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    Cited by:

    1. Bavly, Gilad & Heller, Yuval & Schreiber, Amnon, 2022. "Social welfare in search games with asymmetric information," Journal of Economic Theory, Elsevier, vol. 202(C).
    2. Arad, Ayala, 2008. "The Tennis Coach Problem: A Game-Theoretic and Experimental Study," Foerder Institute for Economic Research Working Papers 275711, Tel-Aviv University > Foerder Institute for Economic Research.
    3. Kaustav Das, 2014. "Strategic Experimentation with Competition and Private Arrival of Information," Discussion Papers 1404, University of Exeter, Department of Economics.
    4. Matros, Alexander & Ponomareva, Natalia & Smirnov, Vladimir & Wait, Andrew, 2019. "Search without observability," Working Papers 2019-04, University of Sydney, School of Economics.
    5. Igor Letina, 2016. "The road not taken: competition and the R&D portfolio," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 433-460, May.
    6. Matros, Alexander & Smirnov, Vladimir, 2011. "Treasure game," Working Papers 2011-10, University of Sydney, School of Economics, revised May 2014.
    7. Jing-Yuan Chio & Laura Magazzini & Fabio Pammolli & Massimo Riccaboni, 2012. "The Value of Failures in Pharmaceutical R&D," Working Papers 1/2012, IMT School for Advanced Studies Lucca, revised Jan 2012.
    8. de Roos, Nicolas & Matros, Alexander & Smirnov, Vladimir & Wait, Andrew, 2018. "Shipwrecks and treasure hunters," Journal of Economic Dynamics and Control, Elsevier, vol. 90(C), pages 259-283.
    9. A. Garnaev, 2007. "Technical note: Find a hidden “treasure”," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(1), pages 109-114, February.
    10. Matros, Alexander & Smirnov, Vladimir, 2016. "Duplicative search," Games and Economic Behavior, Elsevier, vol. 99(C), pages 1-22.
    11. Thomas Greve & Hans Keiding, 2023. "A model of privately funded public research," Journal of Economics, Springer, vol. 140(1), pages 63-91, September.
    12. Suzuki, Toru, 2012. "Competitive problem solving and the optimal prize schemes," Games and Economic Behavior, Elsevier, vol. 75(2), pages 1009-1013.
    13. Arad Ayala, 2012. "The Tennis Coach Problem: A Game-Theoretic and Experimental Study," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-43, April.
    14. Konrad, Kai A., 2014. "Search duplication in research and design spaces — Exploring the role of local competition," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 222-228.
    15. Emma von Essen & Marieke Huysentruyt & Topi Miettinen, 2020. "Exploration in Teams and the Encouragement Effect: Theory and Experimental Evidence," Management Science, INFORMS, vol. 66(12), pages 5861-5885, December.
    16. Shalem, Roy & Trajtenberg, Manuel, 2009. "The Market for R&D Failures," Foerder Institute for Economic Research Working Papers 275729, Tel-Aviv University > Foerder Institute for Economic Research.
    17. Emma von Essen & Marieke Huysentruyt & Topi Miettinen, 2019. "Exploration in Teams and the Encouragement Effect: Theory and Evidence," Economics Working Papers 2019-10, Department of Economics and Business Economics, Aarhus University.
    18. Matros, Alexander & Ponomareva, Natalia & Smirnov, Vladimir & Wait, Andrew, 2022. "Search without looking," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).
    19. Kaustav Das, 2015. "The Role of Heterogeneity in a Model of Strategic Experimentation," Discussion Papers 1507, University of Exeter, Department of Economics.
    20. Denicolò, Vincenzo & Zanchettin, Piercarlo, 2022. "Patent protection for complex technologies," International Journal of Industrial Organization, Elsevier, vol. 81(C).
    21. Christoph Carnehl & Johannes Schneider, 2021. "On Risk and Time Pressure: When to Think and When to Do," Papers 2111.07451, arXiv.org, revised Mar 2022.
    22. Matthias Verbeck & Elisabeth Schulte, 2016. "Contracting with Researchers," MAGKS Papers on Economics 201620, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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