Sergey Malakhov selected papers - Optimal Sequential Search and Optimal Consumption-Leisure Choice
In this paper we introduce the model of consumption-leisure choice where marginal costs and marginal benefit of search support maximization of current consumption ? leisure utility as well as maximization of monetary reserve for future purchases.Despite its algebraic simplicity, the model, presented in this paper, reflects many important considerations of different studies on search behavior. But methodologically the model follows the economic approach developed by G.Stigler and G.Becker who transformed once a commonsense idea, that leisure is not equal to the time away from work, into fundamental theoretical concepts. The model also incorporates some intriguing theoretical issues of J.Stiglitz?s work on self-selection.Following the ?de gustibus non est disputandum? maxim, the paper accentuates the methodological role of marginal rate of substitution of leisure for consumption in decision-making process. But this way redirects the study of search behavior towards an idea of relative sufficiency in consumption, accompanied by buffer-stock saving behavior. The model also activates time horizon of consumption ? leisure choice in unconventional manner and it shows how observable time horizon of consumption ? leisure choice changes MRS (H for Q). The economic approach to relative sufficiency in consumption gives a green light to review the problem of relativity of utility as well as H.Simon?s search-satisficing concept. Finally, the analysis of polar models of behavior, Veblen effect and PWE, illustrates how economic attributes of the model can explain ethical aspects of economic behavior.
consumption, leisure, sequential search, propensity to search, reserve for purchases, relativity of utility, relative sufficiency, marginal rate of substitution
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