MICRO/THEORY: Exploration and Stopping; Professor Weijie Zhong (Stanford University)

Abstract

We fully characterize the possible outcomes of exploration and stopping: all state-time joint distributions achieved by stopping some martingale process with bounded variation. Utilizing this characterization, we provide a general methodology for solving an optimal exploration-stopping problem where the stopping payoff depends on state and time arbitrarily. We reveal the close relation between the pattern of exploration and time preference and apply it to study competitive exploration contests.