Whether or not to open Pandora's box
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.
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.
Supplemental Material - mmc1.pdf