Simultaneous Search

Hector Chade and Lones Smith

No 1556, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We introduce and solve a new class of "downward-recursive" static portfolio choice problems. An individual simultaneously chooses among ranked stochastic options, and each choice is costly. In the motivational application, just one may be exercised from those that succeed. This often emerges in practice, such as when a student applies to many colleges. We show that a greedy algorithm finds the optimal set. The optimal choices are "less aggressive" than the sequentially optimal ones, but "more aggressive" than the best singletons. The optimal set in general contains gaps. We provide a comparative static on the chosen set.

Keywords: college application; submodular optimization; greedy algorithm; directed search (search for similar items in EconPapers)
JEL-codes: C61 D83 J64 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2006-01
New Economics Papers: this item is included in nep-cmp and nep-ict
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Published in Econometrica (2006), 74(5): 1293-1307

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Related works:
Journal Article: Simultaneous Search (2006)
Working Paper: Simultaneous Search (2005)
Working Paper: simultaneous search (2004)
Working Paper: Simultaneous Search (2004)
Working Paper: Simultaneous Search
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