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On preserving the reservation wage property in a continuous job search model. (English) Zbl 0542.90022
Summary: The purpose of this article is to examine a continuous model of job search. Job offers are received randomly over time according to a renewal process. The wage offers are assumed to be positive, independent, and identically distributed random variables. There is a search cost of c monetary units per unit time. The only decision the searcher must make is when to stop searching and accept an offer. It is shown that the optimal stopping strategy which maximizes the searcher’s expected net return over the class of all stopping times possesses the reservation wage property, provided that the interarrival time between two successive job offers in NBUE (new better than used in expectation).

MSC:
91B99 Mathematical economics
60G40 Stopping times; optimal stopping problems; gambling theory
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