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Optimal search and discovery

Greminger,Rafael
Abstract
This paper studies a search problem in which a consumer is initially aware of only a few products. At every point in time, the consumer then decides between searching among alternatives of which he is already aware and discovering more products. I show that the optimal policy for this search and discovery problem is fully characterized by tractable reservation values. Moreover, I prove that a predetermined index fully specifies the purchase decision of a consumer following the optimal search policy. Finally, a comparison highlights differences to classical random and directed search.
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Date
2022-05
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Tilburg University Research Output Collection
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Keywords
consideration set, information, limited awareness, optimal search policy, search theory
Citation
Greminger, R 2022, 'Optimal search and discovery', Management Science, vol. 68, no. 5, pp. 3904-3924. https://doi.org/10.1287/mnsc.2021.4085
URI
https://hdl.handle.net/20.500.14602/75315
License
info:eu-repo/semantics/openAccess
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