Disjoint search for the prices of two goods consumed jointly

TLDR: In this article, the authors consider the problem of multiple search in order to determine the robustness of conclusions based on a theory developed from the search for the price of a single good and reveal a number of insights that emerge when decisions taken in other markets are made explicit.

Abstract: The extensive literature on searching for price information deals almost exclusively with the search for the price of a single good. Casual empiricism shows that consumers buy more than one good and search for the price of more than one good before any single purchase. More importantly, not all of these goods are sold at the same store. Search theory should therefore consider the problem of multiple search in order to determine the robustness of conclusions based on a theory developed from the problem of search for the price of a single good. This paper reveals a number of insights that emerge when decisions taken in other markets are made explicit. Consider the situation facing the builder and designer of a new house. Among other things, the builder must decide on the amount of insulation and the method of heating before construction starts. The decision depends on the prices offered; hence the builder will search for an acceptable offer when prices are not known with certainty. If a low price for heat is found, then little insulation is needed because the cost of lost heat is relatively low. When relatively little insulation is needed, the potential savings from a lower price of insulation are also small. Therefore the builder may be willing to accept a relatively high price for insulation in the event of costly search and having already found a low price for heat. More generally, the price that would be accepted in one market depends on what has been found in the other market. The influence of one market on another is not clear. Consider another example. When a low price for heating is known, the cost, in terms of lost heat, of windows may be low. Thus the builder can' install more windows at a lower opportunity cost