Sequential Search with Multiattribute Options

Churlzu Lim (), J. Neil Bearden () and J. Cole Smith ()
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Churlzu Lim: Department of Systems and Industrial Engineering, University of Arizona, Tucson, Arizona 85721
J. Neil Bearden: Department of Management and Policy, University of Arizona, Tucson, Arizona 85721
J. Cole Smith: Department of Systems and Industrial Engineering, University of Arizona, Tucson, Arizona 85721

Decision Analysis, 2006, vol. 3, issue 1, 3-15

Abstract: We describe a search problem in which a decision maker (DM) must select among sequentially encountered options. Each option is described by multiple attributes, and the value of an option is given by a separable function of its attribute values. However, the attribute values are not known with certainty, and can only be ascertained in a predefined order, at some fixed cost. During the search the DM can choose to select an option, purchase information about an attribute value, reject (permanently) the current option and continue the search, or terminate the search and accept a status quo outcome. We introduce a threshold policy for this search process, and prove the optimality of this policy for separable value functions. We then furnish a dynamic programming procedure for prescribing an optimal policy for this problem. Finally, we derive analytic solutions to some special cases of the problem, and present a case study that demonstrates a possible use of the proposed approach.

Keywords: multiattribute optimization; sequential search; dynamic programming (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (8)

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