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Simultaneous Search

Author

Listed:
  • Hector Chade

    (Dept. of Economics, Arizona State University)

  • Lones Smith

    (Dept. of Economics, University of Michigan)

Abstract

We introduce and solve a new class of "downward-recursive" static portfolio choice problems. An individual simultaneously chooses among ranked stochastic options, and each choice is costly. In the motivational application, just one may be exercised from those that succeed. This often emerges in practice, such as when a student applies to many colleges. We show that a greedy algorithm finds the optimal set. The optimal choices are "less aggressive" than the sequentially optimal ones, but "more aggressive" than the best singletons. The optimal set in general contains gaps. We provide a comparative static on the chosen set.

Suggested Citation

  • Hector Chade & Lones Smith, 2006. "Simultaneous Search," Cowles Foundation Discussion Papers 1556, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1556
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    References listed on IDEAS

    as
    1. Weitzman, Martin L, 1979. "Optimal Search for the Best Alternative," Econometrica, Econometric Society, vol. 47(3), pages 641-654, May.
    2. Hector Chade & Lones Smith, 2006. "Simultaneous Search," Econometrica, Econometric Society, vol. 74(5), pages 1293-1307, September.
    3. James Albrecht & Pieter A. Gautier & Susan Vroman, 2006. "Equilibrium Directed Search with Multiple Applications," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 869-891.
    4. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    5. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
    6. Gul, Faruk & Stacchetti, Ennio, 1999. "Walrasian Equilibrium with Gross Substitutes," Journal of Economic Theory, Elsevier, vol. 87(1), pages 95-124, July.
    7. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
    8. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-969, July.
    9. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213-213.
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    Citations

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    Cited by:

    1. Kushnir, Alexey, 2013. "Harmful signaling in matching markets," Games and Economic Behavior, Elsevier, vol. 80(C), pages 209-218.
    2. Hector Chade & Lones Smith, 2006. "Simultaneous Search," Econometrica, Econometric Society, vol. 74(5), pages 1293-1307, September.
    3. Armstrong, Mark, 2016. "Ordered Consumer Search," MPRA Paper 72194, University Library of Munich, Germany.
    4. Jason Abaluck & Abi Adams, 2017. "What do consumers consider before they choose? Identification from asymmetric demand responses," IFS Working Papers W17/09, Institute for Fiscal Studies.
    5. Hastings, Justine S. & Neilson, Christopher A. & Ramirez, Anely & Zimmerman, Seth D., 2016. "(Un)informed college and major choice: Evidence from linked survey and administrative data," Economics of Education Review, Elsevier, vol. 51(C), pages 136-151.
    6. Jason Abaluck & Abi Adams, 2017. "What Do Consumers Consider Before They Choose? Identification from Asymmetric Demand Responses," NBER Working Papers 23566, National Bureau of Economic Research, Inc.
    7. Ronald Wolthoff, 2010. "Applications and Interviews: A Structural Analysis of Two-Sided Simultaneous Search," 2010 Meeting Papers 114, Society for Economic Dynamics.
    8. Kuhnen, Camelia M., 2010. "Searching for Jobs: Evidence from MBA Graduates," MPRA Paper 21975, University Library of Munich, Germany.
    9. Timothy J. Richards & Stephen F. Hamilton & Koichi Yonezawa, 2017. "Variety and the Cost of Search in Supermarket Retailing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(3), pages 263-285, May.
    10. Gautier, Pieter A. & Wolthoff, Ronald P., 2009. "Simultaneous search with heterogeneous firms and ex post competition," Labour Economics, Elsevier, vol. 16(3), pages 311-319, June.
    11. Andrey Fradkin, 2012. "Do Online Marketplaces Become More Efficient Over Time?," Working Papers 12-24, NET Institute.
    12. James Albrecht & Pieter A. Gautier & Susan Vroman, 2006. "Equilibrium Directed Search with Multiple Applications," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 869-891.
    13. Pieter A. Gautier & Jose Luis Moraga-Gonzalez & Ronald P. Wolthoff, 2007. "Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?," Tinbergen Institute Discussion Papers 07-071/3, Tinbergen Institute.
    14. Stephen Kinsella & David M. Ramsey, 2011. "A Model of Partnership Formation with Friction and Multiple Criteria," Working Papers 201119, Geary Institute, University College Dublin.
    15. Pekkala Kerr, Sari & Pekkarinen, Tuomas & Sarvimäki, Matti & Uusitalo, Roope, 2015. "Post-Secondary Education and Information on Labor Market Prospects: A Randomized Field Experiment," IZA Discussion Papers 9372, Institute for the Study of Labor (IZA).
    16. Olszewski, Wojciech & Vohra, Rakesh, 2014. "Selecting a discrete portfolio," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 69-73.
    17. Galenianos, Manolis & Kircher, Philipp, 2009. "Directed search with multiple job applications," Journal of Economic Theory, Elsevier, vol. 144(2), pages 445-471, March.
    18. Laura Doval, 2014. "Whether or not to open Pandora's box," Discussion Papers 1574, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    19. Klabjan, Diego & Olszewski, Wojciech & Wolinsky, Asher, 2014. "Attributes," Games and Economic Behavior, Elsevier, vol. 88(C), pages 190-206.
    20. Robin S. Lee & Michael Schwarz, 2017. "Interviewing in two-sided matching markets," RAND Journal of Economics, RAND Corporation, vol. 48(3), pages 835-855, August.
    21. David B. Johnson & Matthew D. Webb, 2017. "An Experimental Test of the No Safety Schools Theorem," Carleton Economic Papers 17-10, Carleton University, Department of Economics.
    22. Jackson, C. Kirabo, 2013. "Can higher-achieving peers explain the benefits to attending selective schools? Evidence from Trinidad and Tobago," Journal of Public Economics, Elsevier, vol. 108(C), pages 63-77.
    23. Manolis Galenianos & Philipp Kircher, 2007. "Heterogeneous Firms in a Finite Directed Search Economy," PIER Working Paper Archive 07-003, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    24. Philipp Kircher, 2009. "Efficiency of Simultaneous Search," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 861-913, October.
    25. Gee, Laura Katherine, 2016. "The More You Know: Information Effects on Job Application Rates in a Large Field Experiment," IZA Discussion Papers 10372, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    college application; submodular optimization; greedy algorithm; directed search;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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