Optimal Search and Discovery

Rafael P. Greminger ()
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Rafael P. Greminger: Department of Econometrics & Operations Research, Tilburg University, Tilburg 5000 LE, Netherlands

Management Science, 2022, vol. 68, issue 5, 3904-3924

Abstract: This paper studies a search problem in which a consumer is initially aware of only a few products. At every point in time, the consumer then decides between searching among alternatives of which he is already aware and discovering more products. I show that the optimal policy for this search and discovery problem is fully characterized by tractable reservation values. Moreover, I prove that a predetermined index fully specifies the purchase decision of a consumer following the optimal search policy. Finally, a comparison highlights differences to classical random and directed search.

Keywords: limited awareness; search theory; information; consideration set; optimal search policy (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:5:p:3904-3924

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