Search Theory

AAA

DEFINITION of 'Search Theory'

A study of buyers and sellers who cannot instantly find a commerce partner. Search theory specifically seeks the optimal strategy for those choosing from various opportunities, assuming that there is a cost related to indecision. In other words, search theory attempts to find the optimal balance between the cost of a delayed decision and the value of trying again.

INVESTOPEDIA EXPLAINS 'Search Theory'

Search theory has been influential across the field of economics. It has been used in labor economics to study unemployment caused by workers seeking more desirable jobs, and it has also been used to analyze purchasing decisions. In both instances, the desirability of a particular product or occupation is dependent on the perceived value of the alternatives available minus the undesirability of the hunt to find them.

RELATED TERMS
  1. Dollar Bear

    An investor or speculator who is negative on the outlook for ...
  2. Inward Investment

    The opposite of outward investment, an inward investment involves ...
  3. Strategic Buyer

    A type of buyer in an acquisition that has a specific reason ...
  4. Cash Market

    The marketplace for immediate settlement of transactions involving ...
  5. Outcome Bias

    A decision based on the outcome of previous events without regard ...
  6. Hindsight Bias

    A psychological phenomenon in which past events seem to be more ...
Related Articles
  1. Chart Advisor

    Why Now is the Time for Food and Beverage Stocks

    As volatility rears its ugly head, it's natural to investigate stable sectors such as food and beverages. Here's an appropriately-named ETF to consider.
  2. Chart Advisor

    4 Big Stock Gainers: Hold or Sell?

    These four stocks saw big moves higher on March 17. Is it time to take profits or hold out for more. Here's what the charts say.
  3. Charts & Patterns

    Why These Could Be 2015's 10-Best Pharma Stocks

    The pharmaceutical stocks covered here have significant potential going forward. Here's why.
  4. Charts & Patterns

    Are These the 10 Best Internet Stocks of 2015?

    These internet companies vary in size, but they all offer future potential.
  5. Chart Advisor

    4 Bullish Flag Patterns You Should Trade Now

    Here are four stocks with flag patterns, highlighting the various ways to trade this chart pattern.
  6. Active Trading Fundamentals

    20 Rules To Trade More Professionally

    Break free from the pack and join the professional minority with an approach that raises your odds for long term prosperity.
  7. Chart Advisor

    These 4 Swing Trades Could Place You in the Money

    Take advantage of moves both higher and lower with swing trades based on trend channels.
  8. Trading Strategies

    You'll Lose Profits Without This Trading Strategy

    A trading edge defines your technical or strategic advantage in the highly competitive market environment.
  9. Investing

    Why These Are 2015's Most-Promising Stocks

    A short list of stocks with strong potential for 2015 and beyond.
  10. Chart Advisor

    Are These Triangle Patterns Breaking Out?

    The next trending move in these four stocks could start from the breakout of these triangles.

You May Also Like

Hot Definitions
  1. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  2. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  3. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  4. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  6. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
Trading Center