Search Theory; Current Perspectives
17 Pages Posted: 17 Dec 2009
Date Written: September 15, 2006
Abstract
In this article I briefly review recent developments in search theory. Particular attention is given to the framework of directed search. I first illustrate the inefficiency that arises in the equilibrium of standard (undirected) search models. Then I provide a formulation of directed search and show that the resulting equilibrium eliminates the inefficiency. Examples of directed search with price posting and auction are provided both for the market with a finite number of individuals and for a large market. After describing the application of search models in monetary theory, I conclude with a remark on the future research.
Keywords: Search, Efficiency, Unemployment
JEL Classification: C78, E1
Suggested Citation: Suggested Citation
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