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A theory of targeted search

  • Cheremukhin, Anton A.

    (Federal Reserve Bank of Dallas)

  • Tutino, Antonella

    (Federal Reserve Bank of Dallas)

  • Restrepo-Echavarria, Paulina

    (Ohio State University)

We present a theory of targeted search, where people with a finite information processing capacity search for a match. Our theory explicitly accounts for both the quantity and the quality of matches. It delivers a unique equilibrium that resides in between the random matching and the directed search outcomes. The equilibrium that emerges from this middle ground is inefficient relative to the constrained Pareto allocation. Our theory encompasses the outcomes of the random matching and the directed search literature as limiting cases.

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Paper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 1402.

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Length: 55 pages
Date of creation: 13 Feb 2014
Date of revision:
Handle: RePEc:fip:feddwp:1402
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