Allocation, Information and Markets pp 271-286 | Cite as
Search Theory
Abstract
Walrasian analysis presumes that resource allocation can be adequately modelled using the assumption of instantaneous and costless coordination of trade. In contrast, Search Theory is the analysis of resource allocation with specified, imperfect technologies for informing agents of their trading opportunities and for bringing together potential traders. The modelling advantages of assuming a frictionless coordination mechanism, plus years of hard work, permit Walrasian analysis to work with very general specifications of individual preferences and production technologies. In contrast, search theorists have explored a variety of special allocation mechanisms together with very simple preferences and production technologies. Lacking more general theories, we examine the catalogue of analyses that have been completed.
Keywords
Arrival Rate Equilibrium Price Search Cost Unemployment Spell Walrasian EquilibriumPreview
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