Strategic Search Theory

Abstract

[Introduction] The "theory of search" - the application of optimal stopping rules to decision-making under uncertainty - is well-developed for the case of an individual agent (Kohn and Shavell [1974], Lippman and McCall [1976] and Rothschild [1973]). It has been applied primarily to the problems of job search and consumers searching for the lowest price. However, a number of extensions, generalizations and new applications have been offered recently. Among these are the dynamic analysis of the inspection and evaluation of multiple-characteristic goods (Wilde [1980]); the characterization of optimal search when sampling from a number of different distributions (Spulber [1979] and Weitzman [1979]); and the application of standard search theory to the determination of market structure via uncertain imitability (Lippman and Rumelt [1980]), research and development (Evenson and Kislev [1976], Spulber [1980] and Lee [1980]), and the decision to adopt a new technology of uncertain value (Jensen [1982]).