Optimal Search with Costly Recall
This paper builds a consumer search model where the cost of going back to stores already searched is explicitly taken into account. We show that the optimal search rule under costly recall is very different from the optimal search rule under perfect recall. Under costly recall, the optimal search behaviour is nonstationary and, moreover, the reservation price is not independent of previously sampled prices. We fully characterize the optimal search rule under costly recall when a finite number of firms draws price quotes from a given distribution.
|Tinbergen Institute Discussion Paper Series|
|Discussion paper / Tinbergen Institute|
Janssen, M.C.W, & Parakhonyak, A. (2008). Optimal Search with Costly Recall (No. TI 2008-002/1). Discussion paper / Tinbergen Institute. Tinbergen Institute. Retrieved from http://hdl.handle.net/1765/10896