Search models have vastly improved our understanding of important market events that are not explained by classical economic theory, but they tend to treat price formation as an afterthought. This column introduces a survey of the literature on ‘directed search’, which aims to keep the explanatory power of search models but allows for a meaningful role of prices in determining where people search for a trading partner.
Randall Wright, Philipp Kircher, Benoit Julien, Veronica Guerrieri, 07 January 2018
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