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Optimal search, learning and implementation

Optimal search, learning and implementation
Optimal search, learning and implementation
We characterize the incentive compatible, constrained efficient policy (“second-best”) in a dynamic matching environment, where impatient, privately informed agents arrive over time, and where the designer gradually learns about the distribution of agentsʼ values. We also derive conditions on the learning process ensuring that the complete-information, dynamically efficient allocation of resources (“first-best”) is incentive compatible. Our analysis reveals and exploits close, formal relations between the problem of ensuring implementable allocation rules in our dynamic allocation problems with incomplete information and learning, and between the classical problem, posed by Rothschild (1974) [20], of finding optimal stopping policies for search that are characterized by a reservation price property.
0022-0531
881-909
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d

Gershkov, Alex and Moldovanu, Benny (2012) Optimal search, learning and implementation. Journal of Economic Theory, 147 (3), 881-909. (doi:10.1016/j.jet.2012.01.012).

Record type: Article

Abstract

We characterize the incentive compatible, constrained efficient policy (“second-best”) in a dynamic matching environment, where impatient, privately informed agents arrive over time, and where the designer gradually learns about the distribution of agentsʼ values. We also derive conditions on the learning process ensuring that the complete-information, dynamically efficient allocation of resources (“first-best”) is incentive compatible. Our analysis reveals and exploits close, formal relations between the problem of ensuring implementable allocation rules in our dynamic allocation problems with incomplete information and learning, and between the classical problem, posed by Rothschild (1974) [20], of finding optimal stopping policies for search that are characterized by a reservation price property.

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More information

Accepted/In Press date: 25 November 2011
e-pub ahead of print date: 28 January 2012

Identifiers

Local EPrints ID: 503685
URI: http://eprints.soton.ac.uk/id/eprint/503685
ISSN: 0022-0531
PURE UUID: 65f3bbf1-ba79-4240-996c-b2fb1b65d05b
ORCID for Alex Gershkov: ORCID iD orcid.org/0000-0002-6062-8428

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Date deposited: 08 Aug 2025 16:53
Last modified: 09 Aug 2025 02:19

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Contributors

Author: Alex Gershkov ORCID iD
Author: Benny Moldovanu

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