Ulric B. and Evelyn L. Bray Social Sciences Seminar
Baxter B125
When to Decide: Timing of Choice in Parallel Search
Can Urgun,
Assistant Professor of Economics,
Princeton University,
Abstract: A decision-maker needs to choose one of two alternatives. They have priors about the quality of each and receive signals in continuous time. They need to decide when to stop acquiring information and make a choice, accounting for a cost that depends on the time spent. When should they stop gathering information and make a choice? This is one of the most classic problems in decision-making, yet the solution is unknown outside of very special cases. This paper fully characterizes the optimal stopping rule and provides a point equation for the stopping boundary for the typical case in which priors and signals are Normally distributed, and the cost is linear or convex.
Written with Pietro Ortoleva.
For more information, please contact Letty Diaz by phone at 626-395-1255 or by email at letty.diaz@caltech.edu.