Generalized best choice problem based on the information economics approach

Generalized best choice problem based on the information economics approach

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Article ID: iaor2005818
Country: United Kingdom
Volume: 55
Issue: 9
Start Page Number: 988
End Page Number: 999
Publication Date: Sep 2004
Journal: Journal of the Operational Research Society
Authors:
Keywords: information
Abstract:

We consider the problem of choosing the ‘best choice’ among a certain number of objects that are presented to a decision-maker in sequential order. Such a sequential selection problem is commonly referred to as the ‘best choice problem’, and its optimal stopping rule has been obtained either via the dynamic programming approach or via the Markovian approach. Based on the theory of information economics, we propose in the paper the third approach to a generalized version of the best choice problem that is intuitively more appealing. Various types of the best choice problem, such as (1) the classical secretary problem, (2) no information group interview problem, and (3) full information best choice problem with a random walk process, are shown to be special cases of the generalized best choice problem. The modelling framework of information economics has potential for building theory that ultimately would produce practical stopping rules.

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