Macroeconomists have extended search theory by studying general equilibrium models in which one or more types of searchers interact. Mathematically, search models are optimal stopping problems. Search models illustrate how best to balance the cost of delay against the value of the option to try again. More precisely, search theory omdel an individual’s optimal strategy when choosing from a series of potential opportunities of random quality, under the assumption that delaying choice is costly. In both cases, whether a given job or product is acceptable diamone-mortensen-pissarides on the searcher’s beliefs about the alternatives available in the market. From a consumer’s perspective, a product worth purchasing would have sufficiently high quality, and be offered at a sufficiently low price.
In consumer theoryit has been applied to analyze purchasing decisions. It has been applied in labor economics to analyze frictional unemployment resulting diamond-mprtensen-pissarides job hunting by workers. Search theory has been influential in many areas of economics. In microeconomicssearch theory studies buyers or sellers who cannot instantly find a trading partner, and must therefore search for a modeel prior to transacting. ▷ Search models are popular in many contexts: labor markets, monetary theory, etc. An accurate global projection algorithm is critical for quantifying the basic mo- ments of the Diamond–Mortensen–Pissarides model. The Diamond, Mortensen and Pissarides Nobel: Search and market In business cycle models, they are used to explain the amplification of.
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