Reservation Level

Input r v

Output

110,000

Month
Job offer
Accept offer?
Search cost
Net payoff in a month

1
2
3
4
5
6
7
93375.98 99148.94 95563.73 101557.5 111442.1 95972.86 101693.7
0
0
0
0
1
1
1
2000
2000
2000
2000
0
0
0
-2000
-2000
-2000
-2000 111442.1
0
0

Total payoff

103442.1

Theoretically, the candidate can go for a very

long time (infinity!) without a job. In practice,
a horizon of 30 periods guarantees that a
suitable job offer will be obtained (for
"reasonable" values of the reservation level).

8
9
10
11
12
111276.2 111808.4 101620.7 113148.5 99743.97
1
1
1
1
1
0
0
0
0
0
0
0
0
0
0

13
105539
1
0
0

14
15
16
17
97948.6 108914.6 112003.2 93440.27
1
1
1
1
0
0
0
0
0
0
0
0

18
19
20
21
96747.93 107780.5 103534.5 100751.9
1
1
1
1
0
0
0
0
0
0
0
0

22
23
24
109332 99544.78 100272.3
1
1
1
0
0
0
0
0
0

25
26
27
105394 96222.35 89485.53
1
1
1
0
0
0
0
0
0

28
29
30
96722.3 97204.86 98015.08
1
1
1
0
0
0
0
0
0

120,000
Reservation Level
Total Payoff
80000
100,304
85000
101,048
90000
102,355
95000
104,102
100000
105,720
105000
106,660
110000
103,334
115000
77,736
120000
17,192

100,000

80,000

Toatal Payof

60,000

40,000

20,000

0
80000 85000 90000 95

Res

110000

105000

100000

95000

90000

85000

80000

Reservation Level
Total payoff

100304.206546 101048.1 102354.5 104102.3 105719.9 106659.7 103333.6

0
0000 85000 90000 95000 100000 105000 110000 115000 120000
Reservation Level

120000

115000

77735.95 17191.63