**Author**:
Govindarajulu, Z. and Klaus J. Utikal**Title**: Optimal Choice From Known Rewards With Uncertain Response**Abstract**: Consider a random permutation of a finite number n of known elements
representing rewards. These rewards will be made or not made with certain
known probabilities. At any stage a reward made can be accepted or rejected,
there is no recall and only one reward can be accepted. The problem is to
maximize the expected reward accepted. We propose a
computationally feasible approximation to the solution of the dynamic
programming equation of the problem. Estimates of the error of the
approximation are given recursively as well as in explicit form. Recursively
the error of the approximation at any stage of the game is obtained in terms
of the approximation and its error estimate at the following state. In
numerical examples the goodness of the approximation and its error estimates
are found by comparison with the optimal solution.**Keywords**: optimal stopping, optimal policy approximations, dynamic programming,
uncertainty of selection **JEL-Classification-Number**: C44, C61**Creation-Date**: November 1994

**URL:**
../1994/a/bonnsfa459.pdf

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