American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
On Optimal Scheduling
American Economic Journal: Microeconomics
vol. 16,
no. 4, November 2024
(pp. 475–522)
Abstract
We consider a decision-maker sequentially choosing among alternatives when periodic payoffs depend on both chosen and unchosen alternatives in that period. We show that when flow payoffs are the sum or product of payoffs from chosen and unchosen alternatives, the optimal policy is an index policy. We characterize key properties of the optimal dynamics and present an algorithm for computing the indices explicitly. Furthermore, we use the results to generalize Weitzman's (1979) classic "Pandora's boxes" problem to allow for complementarities. We illustrate the framework's usefulness through applications, including decision problems with disappearing alternatives, repeated bargaining, dynamic supervision, and dynamic occupational choice.Citation
Eliaz, Kfir, Daniel Fershtman, and Alexander Frug. 2024. "On Optimal Scheduling." American Economic Journal: Microeconomics, 16 (4): 475–522. DOI: 10.1257/mic.20230169Additional Materials
JEL Classification
- C78 Bargaining Theory; Matching Theory
- D82 Asymmetric and Private Information; Mechanism Design
- M11 Production Management
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