Optimal delegated search with learning and nomonetary transfers

Elnaz Bajoori and Julia Wirtz

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: A principal delegates the search for the cheapest price to an agent with private information about the price distribution. We do not allow for any monetary transfers to incentivize the agent. The optimal pooling search rule features strictly increasing thresholds, which reflect the principal’s updated belief about the price distribution. We show that the pooling rule can be improved upon by a separating menu of search rules with fixed thresholds and a minimum number of offers. Then, we find conditions under which either rule is preferred. Finally, we characterize the optimal separating search rule with a minimum number of offers.

Date: 2022-05-23
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:22/768

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