A theory of search with deadlines and uncertain recall

Keywords

Equilibrium search, Uncertain recall, Deadlines, Price posting, Reservation prices

Abstract

We ask how the ability to recall past prices affects the dynamics of search and price formation. In the model, buyers have limited time to purchase a good and face uncertainty regarding the availability of past price quotes in the future. Sellers cannot observe a potential buyer’s remaining time until deadline nor her quote history, and hence post prices that weigh the probability of sale versus the profit once sold. We find that, in contrast to conventional wisdom, reducing the consumer’s recall ability may actually improve his expected utility because it lowers the average expected price in the market and reduces the duration of search.

Original Publication Citation

“A Theory of Search with Deadlines and Uncertain Recall,” by S. Nuray Akin and Brennan Platt. Economic Theory, 55:101-133, January 2014.

Document Type

Peer-Reviewed Article

Publication Date

2014-1

Permanent URL

http://hdl.lib.byu.edu/1877/8517

Publisher

Economic Theory

Language

English

College

Family, Home, and Social Sciences

Department

Economics

University Standing at Time of Publication

Full Professor

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