The economics of search is a prominent component of economic theory, and it has a richness and elegance that underpins a host of practical applications. In this book Brian and John McCall present a comprehensive overview of the economic theory of search, from the classical model of job search formulated 40 years ago to the recent developments in equilibrium models of search.
The book gives decision-theoretic foundations to seemingly slippery issues in labour market theory, estimation theory and economic dynamics in general, and surveys the entire field of the economics of search, including its history, theory, and econometric applications. Theoretical models of the economics of search are covered as well as estimation methods used in search theory and topics covered include job search, turnover, unemployment, liquidity, house selling, real options and auctions. The mathematical methods used in search theory such as dynamic programming are reviewed as well as structural estimation methods and econometric methods for duration models. The authors also explore the classic sequential search model and its extensions in addition to recent advances in equilibrium search theory.
1. Introduction 2. Mathematical Methods 3. The History and Evolution of Sequential Analysis 4. The Basic Sequential Search Model and its Ramifications 5. Estimation Methods for Duration Models 6. Unemployment, Unemployment Insurance and Sequential Job Search 7. Job Search in a Dynamic Economy 8. Expected Utility Maximizing Job Search 9. Multi-armed Bandits and their Economic Applications 10. A Sample of Early Response to Diamond’s Paradox and Rothschild’s Complaint 11. Equilibrium Search after the Diamond-Mortensen-Pissarides Breakthrough 12. Structural Estimation Methods 13. The Ubiquity of Search 14. Topics for Further Inquiry