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- Title
The best choice problem under ambiguity.
- Authors
Chudjakow, Tatjana; Riedel, Frank
- Abstract
We model and solve best choice problems in the multiple prior framework: An ambiguity averse decision maker aims to choose the best among a fixed number of applicants that appear sequentially in a random order. The agent faces ambiguity about the probability that a candidate-a relatively top applicant-is actually best among all applicants. We show that our model covers the classical secretary problem, but also other interesting classes of problems. We provide a closed form solution of the problem for time-consistent priors using backward induction. As in the classical case, the derived stopping strategy is simple. Ambiguity can lead to substantial differences to the classical threshold rule.
- Subjects
SECRETARY problem (Probability theory); UNCERTAINTY (Information theory); OPTIMAL stopping (Mathematical statistics); ECONOMIC decision making; MATHEMATICAL models; PROBABILITY theory
- Publication
Economic Theory, 2013, Vol 54, Issue 1, p77
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-012-0715-1