A theory of search with recall and uncertain deadlines
We analyze an equilibrium search model where buyers seek to purchase a good before a deadline 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 his quote history, and hence post prices that weigh the probability of sale versus the profit once sold. The model's equilibrium can take one of three forms. In a late equilibrium, buyers initially forgo purchases, preferring to wait until the deadline. In an early equilibrium, any equilibrium offer is accepted as soon as it is received. In a full equilibrium, higher prices are turned down until near the deadline, while lower prices are immediately accepted. Equilibrium price and sales dynamics are determined by the time remaining until the deadline and the quote history of the consumer.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA|
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- Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
- S. Nuray Akin & Brennan C. Platt, 2011. "Searching on a Deadline," Working Papers 2011-11, University of Miami, Department of Economics.
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- S. Nuray Akin & Brennan Platt, 2012.
"Running Out of Time: Limited Unemployment Benefits and Reservation Wages,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 149-170, April.
- S. Nuray Akin & Brennan Platt, 2011. "Code and data files for "Running Out of Time: Limited Unemployment Benefits and Reservation Wages"," Computer Codes 10-201, Review of Economic Dynamics.
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