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Whether or not to open Pandora's box

Doval, Laura (2018) Whether or not to open Pandora's box. Journal of Economic Theory, 175 . pp. 127-158. ISSN 0022-0531.

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[img] PDF (The supplementary material is organized as follows. Section S.1 shows that no index rule is optimal in the search problem considered in the main text. Section S.2 contains the proof of Propositions 5 and Corollary 1, while Section S.3 contains the ...) - Supplemental Material
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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.

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Additional Information:© 2018 Elsevier Inc. Received 20 October 2014, Revised 28 December 2017, Accepted 9 January 2018, Available online 31 January 2018. I am very thankful to Eddie Dekel for useful discussions and his detailed comments. I am particularly grateful to Jeff Ely for his comments and encouragement when this project was in its formative stages, and for his continuing guidance and support. I also wish to thank Héctor Chade, René Leal Vizcaíno, Wojciech Olszewski, Mallesh Pai, Larry Samuelson, Pablo Schenone, and Juuso Välimäki for useful discussions. I also benefited immensely from the thoughtful feedback of the Editor, Xavier Vives, an Associate Editor, and two anonymous referees. All errors are, of course, my own.
Subject Keywords:Search; Information acquisition
Classification Code:JEL: D83
Record Number:CaltechAUTHORS:20180131-102705515
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Official Citation:Laura Doval, Whether or not to open Pandora's box, Journal of Economic Theory, Volume 175, 2018, Pages 127-158, ISSN 0022-0531, (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:84594
Deposited By: Tony Diaz
Deposited On:31 Jan 2018 18:34
Last Modified:02 Mar 2018 16:14

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