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Article
Optimal Sequential Search and Optimal Consumption-Leisure Choice
Economic Policy (the Russian version,Moscow,ANE-IEP) (2011)
  • Sergey Malakhov
Abstract

This paper describes the static model of consumption-leisure choice in which both the maximization of utility and the maximization of precautionary savings for sequential purchases are constrained by the equality of the marginal costs of search to their marginal benefits. The marginal rate of substitution of leisure for consumption appears in the specific form, which updates the Cobb-Douglas utility function and provides search behavior with the optimal stopping rule. This rule bridges the gap between the neoclassical explanation of search behavior and the search-satisficing concept. The original arrangements of polar models of behavior, the overconsumption effect, the Veblen effect, and Protestant work ethics complete the presentation of the model.

Keywords
  • consumption,
  • leisure,
  • propensity to search,
  • reserve for future purchases
Disciplines
Publication Date
September 20, 2011
Publisher Statement
The Russian version of this paper is published in 'Economic Policy'. 2011,Vol.6,â„–6,pp.148-168//Russian Academy of National Economy and Public Administration-Gaidar Institute For Economic Policy. Available at: http://www.iep.ru/files/text/policy/2011_6/malakhov.pdf
Citation Information
Sergey Malakhov. "Optimal Sequential Search and Optimal Consumption-Leisure Choice" Economic Policy (the Russian version,Moscow,ANE-IEP) Vol. 6 Iss. 6 (2011)
Available at: http://works.bepress.com/sergey_malakhov/2/