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A theory of search with deadlines and uncertain recall

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  • Ş. Akın

    ()

  • Brennan Platt

    ()

Abstract

We 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

Suggested Citation

  • Ş. Akın & Brennan Platt, 2014. "A theory of search with deadlines and uncertain recall," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(1), pages 101-133, January.
  • Handle: RePEc:spr:joecth:v:55:y:2014:i:1:p:101-133
    DOI: 10.1007/s00199-013-0740-8
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    References listed on IDEAS

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    Cited by:

    1. Katja Seim & Michael Sinkinson, 2016. "Mixed pricing in online marketplaces," Quantitative Marketing and Economics (QME), Springer, vol. 14(2), pages 129-155, June.
    2. Brennan Platt & Nuray Akin, 2017. "An Equilibrium Search Model of Fire Sales," 2017 Meeting Papers 949, Society for Economic Dynamics.

    More about this item

    Keywords

    Equilibrium search; Uncertain recall; Deadlines ; Price posting; Reservation prices; D40; D83;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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