Testing Optimality in Job Search Models

40 Pages Posted: 9 Sep 2001

See all articles by John W. Schindler

John W. Schindler

Board of Governors of the Federal Reserve System

Date Written: September 2001

Abstract

This paper uses Bayesian techniques to compare three definitions of optimality for the basic job search model: the standard income-maximizing definition, an approximation to the standard definition, and a simple alternative. The important role of prior choice in these comparisons is illustrated. Using natural conjugate priors to represent hypothetical samples of data, we find that the simple alternative is preferred to the standard definition of optimality. However, using priors constructed from findings in the literature, we are able to find some evidence in favor of the standard definition of optimality.

Keywords: Bayesian analysis, Bayes factors

JEL Classification: C11, J64, C15

Suggested Citation

Schindler, John W., Testing Optimality in Job Search Models (September 2001). Available at SSRN: https://ssrn.com/abstract=282572 or http://dx.doi.org/10.2139/ssrn.282572

John W. Schindler (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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