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. Trading Strategies

    How effective is creating trade entries after spotting an Exhaustion Gap pattern?

    Understand the components of the exhaustion gap pattern, how and why it occurs, and how it can be used to create an effective trading strategy.
  2. Chart Advisor

    Is It A Breakout? See The Point-And-Figure Chart

    These stocks have broken out of a triple top formation using point-and-figure charting, a bullish sign.
  3. Chart Advisor

    A Multi-Asset Income ETF For Defensive Investors

    In light of market volatility and worries that stocks are overbought, one product worth noting is the Guggenheim Multi-Asset Income ETF.
  4. Chart Advisor

    These Stocks Offer Range-Trading Opportunities

    These stocks are trading in ranges (or were recently) and present opportunities to buy at support or short sell at resistance.
  5. Investing has its ups and downs, but financial advisers can do much to prepare their clients and their clients' portfolios for such volatility.
    Investing Basics

    How Advisors Can Help Clients Stomach Volatility

    Investing has its ups and downs, but financial advisers can do much to prepare their clients and their clients' portfolios for such volatility.
  6. Chart Advisor

    These 4 Stocks Are Getting Squeezed For A Breakout

    These stocks are trading in a tight range that can't last for long. A break could result in the next major move of the trend.
  7. The S&P 500 is near major resistance, as are many individual stocks. Whether they break through or not can say a lot about their future direction.
    Chart Advisor

    Can These Stocks Break Through Key Resistance?

    The S&P 500 is near major resistance, as are many individual stocks. Whether they break through or not can say a lot about their future direction.
  8. Chart Advisor

    Gold's Next Move Is Lower

    Bearish traders have started shorting gold now that is has fallen below $1,180. Where does gold go from here?
  9. Much has been said about using trend analysis to gauge the market, but what do we really know about the concept
    Charts & Patterns

    (Un)Mapping the Trend

    Much has been said about using trend analysis to gauge the market, but what do we really know about the concept "trend"?
  10. Trading Strategies

    Technical Analysis Strategies for Beginners

    Some investors find fundamentals boring. For those types, there's technical analysis. It's not difficult, but it requires patience and sometimes, early rising.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center