 Shipwrecks and treasure huntersNicolas de Roos, Alexander Matros, Vladimir Smirnov and Andrew Wait () Journal of Economic Dynamics and Control, 2018, vol. 90, issue C, 259-283 Abstract: We examine dynamic search as a game in which two rivals explore (an island) for a hidden prize of known value. In every period until its discovery, the players decide how much of the unsearched area to comb. If a player finds the prize alone he wins it and the game ends. Players have a per-period discount factor and costs proportional to the area they search. First, as a benchmark for efficiency, we solve the one-player search problem. Second, in the two-player setting we show that typically there is inefficient over-search – a result akin to the tragedy of the commons. However, for players with intermediate levels of patience, there is the possibility of inefficient under-search as players incorporate the expected future payoffs in their current search decisions. Finally, with patient players, several counterintuitive results can arise: for example, players might be better off searching a larger island or looking for a less valuable prize. Keywords: R&D; Search; Uncertainty (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:90:y:2018:i:c:p:259-283 DOI: 10.1016/j.jedc.2018.03.004 Access Statistics for this article Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok More articles in Journal of Economic Dynamics and Control from Elsevier |
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