In this paper a market where a buyer (job seeker) is searching in a known order among sellers (e.g., a motorist driving along a road looking for gasoline) is described. Both sellers and buyers are assumed to behave strategically. There are many types of buyers. The sellers know only the distribution of all possible buyers; similarly, buyers have imperfect information about sellers. The analysis is conducted by modeling the market as a game with incomplete information; the equilibrium is characterized. A central feature of the game is that both buyers and sellers rationally update their prior information about each other as the game unfolds sequentially. It is shown that prices need not vary monotonically along the search process.

In this paper a market where a buyer (job seeker) is searching in a known order among sellers (e.g., a motorist driving along a road looking for gasoline) is described. Both sellers and buyers are assumed to behave strategically. There are many types of buyers. The sellers know only the distribution of all possible buyers; similarly, buyers have imperfect information about sellers. The analysis is conducted by modeling the market as a game with incomplete information; the equilibrium is characterized. A central feature of the game is that both buyers and sellers rationally update their prior information about each other as the game unfolds sequentially. It is shown that prices need not vary monotonically along the search process.

We study a novel mechanism design model in which agents each arrive sequentially and choose one action from a set of actions with unknown rewards. The information revealed by the principal affects the incentives of the agents to explore and generate new information. We characterize the optimal disclosure policy of a planner whose goal is to maximize social welfare. One interpretation of our result is the implementation of what is known as the “wisdom of the crowd.” This topic has become increasingly relevant with the rapid spread of the Internet over the past decade.