Optimal Search and Awareness Expansion

Rafael Greminger

Research output: Working paperDiscussion paperOther research output

202 Downloads (Pure)

Abstract

This paper introduces a search problem where a consumer has to first become aware of an alternative, before being able to search it. Initially, the consumer is aware of only a few alternatives. During search, the consumer sequentially decides between searching alternatives he is already aware of and expanding awareness to discover more products. I show that the optimal policy for this search problem is fully characterized by simple reservation values. Moreover, I prove that the purchase outcome of a consumer optimally solving the search problem is equivalent to the consumer simply choosing the product offering the largest value on a predetermined index.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages35
Volume2019-034
Publication statusPublished - 19 Nov 2019

Publication series

NameCentER Discussion Paper
Volume2019-034

Keywords

  • sequential search
  • limited awareness
  • information aquisition

Fingerprint

Dive into the research topics of 'Optimal Search and Awareness Expansion'. Together they form a unique fingerprint.

Cite this