Article ID Journal Published Year Pages File Type
957310 Journal of Economic Theory 2011 13 Pages PDF
Abstract
We analyse optimal stopping when the economic environment changes because of learning. A primary application is optimal selling of an asset when demand is uncertain. The seller learns about the arrival rate of buyers. As time passes without a sale, the seller becomes more pessimistic about the arrival rate. When the arrival of buyers is not observed, the rate at which the seller revises her beliefs is affected by the price she sets. Learning leads to a higher posted price by the seller. When the seller does observe the arrival of buyers, she sets an even higher price.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
, ,