Whether or not to open Pandora's box

Laura Doval

Journal of Economic Theory, 2018, vol. 175, issue C, 127-158

Abstract: I study a single-agent sequential search problem as in Weitzman (1979). Contrary to Weitzman, conditional on stopping, the agent may take any uninspected box without first inspecting its contents. This introduces a new trade-off. By taking a box without inspection, the agent saves on its inspection costs. However, by inspecting it, he may discover that its contents are lower than he anticipated. I identify sufficient conditions on the parameters of the environment under which I characterize the optimal policy. Both the order in which boxes are inspected and the stopping rule may differ from that in Weitzman's model. Moreover, I provide additional results that partially characterize the optimal policy when these conditions fail.

Keywords: Search; Information acquisition (search for similar items in EconPapers)
JEL-codes: D83 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Working Paper: Whether or not to open Pandora's box (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:175:y:2018:i:c:p:127-158

DOI: 10.1016/j.jet.2018.01.005

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