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The Economics of Information and Optimal Stopping Rules
[Technical Report, Research Paper]
RAND CORP SANTA MONICA CA
Pagination or Media Count:
In this paper, two different stopping environments were analyzed. The decision process occurring in the first environment is continuous and repetitive like inventory management, process control, and maintenance management. However, the probability mechanism associated with the repetitive process is not known. Frequently, the decision-maker has the option of accumulating information about the probability law. The problem is when to stop collecting information. Statistical decision theory was used to solve this class of problems. In the second type of stopping environment the essence of the decision process is that it eventually terminates. Examples of such processes include house-searching, mate selection, and many kinds of investment decisions.
[A, Approved For Public Release]