Convergence in a sequential two stage decision making process

Juan Enrique Martinez-Legaz and Antoine Soubeyran

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Abstract: We analyze a sequential decision making process, in which at each step the decision is made in two stages. In the first stage a partially optimal action is chosen, which allows the decision maker to learn how to improve it under the new environment. We show how inertia (cost of changing) may lead the process to converge to a routine where no further changes are made. We illustrate our scheme with some economic models.

Keywords: Sequential decision making; costs to change; convergence MSC(2010): 91B06 (search for similar items in EconPapers)
Date: 2016-12
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-01690175
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Citations: View citations in EconPapers (2)

Published in Bull. Iranian Math. Soc, 2016, 42 (7), pp.25 - 29

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01690175

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