Optimal Policies for a Class of Search and Evaluation Problems
A person searches through a population of possible actions, looking for one with high value. He discovers these actions one after another, paying a certain cost each time. On his first encounter with a possible action, the person obtains some preliminary information about its actual value, and at this point he can take the action, he can continue looking, or, at a certain cost, he can perform a test and obtain some more information about its actual value. If he decides to test, then having obtained the additional information he can again either take the action or continue looking. The problem is to conduct this process in such a manner as to maximize expected net value, that is, the expected value of the action finally taken minus the expected total cost of searching and testing. This problem is analyzed and optimal policies are given in the case where the possible actions are regarded as independent selections from a large population. The joint distribution in this population of the actual value, the preliminary information, and the additional information gained from testing, is assumed to be known. The situation where many possibilities are to be selected, subject to a budget constraint on total search and testing cost, is also treated. For this problem asymptotically optimal results are given for large budgets.
Volume (Year): 10 (1964)
Issue (Month): 4 (July)
|Contact details of provider:|| Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA|
Web page: http://www.informs.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:10:y:1964:i:4:p:746-759. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.