Convergence in a sequential two stages decision making process

Document Type : ORO2013


1 Departament‎ ‎d'Economia i d'Historia Economica‎, ‎Universitat Autonoma de‎ ‎Barcelona‎, ‎08193 Bellaterra‎, ‎and Barcelona Graduate School of Mathematics (BGSMath)‎, ‎BARCELONA‎, ‎Spain.

2 Aix-Marseille University (Aix-Marseille School of Economics)‎ ‎CNRS & EHESS‎, ‎Chateau Lafarge‎, ‎route des Milles‎, ‎13290 Les Milles‎, ‎France.


We analyze a sequential decision making process, in which at each step the decision is made in two stages. In the rst stage a partially optimal action is chosen, which allows the decision maker to learn how to improve it under the new environment. We show how inertia (cost of changing) may lead the process to converge to a routine where no further changes are made. We illustrate our scheme with some economic models.


Main Subjects

C. Berge, Espaces Topologiques: Fonctions Multivoques, Coll. Universitaire de Mathematiques, 3, Dunod, Paris, 1959.
J. Caristi, Fixed point theorems for mappings satisfying inwardness conditions, Trans. Amer. Math. Soc. 215 (1976) 241--251.