Working Paper: CEPR ID: DP16341
Authors: Doruk Cetemen; Can Urgun; Leeat Yariv
Abstract: We study a model of collective search by teams. Discoveries beget discoveries and correlated search results are governed by a Brownian path. Search results' variation at any point---the search scope---is jointly controlled. Agents individually choose when to cease search and implement their best discovery. We characterize equilibrium and optimal policies. Search scope is constant and independent of search outcomes as long as no member leaves. It declines after departures. A simple drawdown stopping boundary governs each agent’s search termination. We show the emergence of endogenous exit waves, whereby possibly heterogeneous agents cease search all at once.
Keywords: Retrospective Search; Optimal Stopping; Collective Action; Exit Waves
JEL Codes: C73; D81; D83; O35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| search scope (P27) | search process stability (C62) |
| departure of agents (L85) | decline in search scope (P27) |
| search results below threshold (C24) | agents cease searching (L85) |
| marginal to fixed costs ratio (D24) | equilibrium search scopes (C62) |
| marginal to fixed costs ratio (D24) | drawdown sizes (D39) |
| one agent's exit (L85) | other agents' exits (L85) |
| search dynamics structure (C69) | agents' decisions (D79) |