Decision Making with Product Network

Y. Masatlioglu and E. Suleymanov, Economic Theory 71, 185–209, March .


A product network comprises a vast number of goods which are linked to one another. This paper investigates decision making in this new environment by using revealed preference techniques. A decision maker will search within the network to uncover available goods. Due to the constraint imposed by the network structure and the starting point, the decision maker might not discover all available goods. We illustrate how one can deduce both the decision maker’s preference and her product network from observed behavior. We also consider an extension of the model where the decision maker might terminate the search before exhausting all the options (limited search).

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