The Foxes are chasing Argentine midfielder Esteban Cambiasso, who recently left Inter Milan after 10 years at the San Siro.
Pearson admitted he is also hoping to add a defender and a forward to his squad but said he is happy to proceed with what he has if the club cannot find value in the market.
"It's proven to be more difficult this window,” he said. “There is a possibility of inflating prices because there is a need for it but my recommendation on it is 'don't do it'.
"We've had our fingers burnt in the past with doing deals late in the window. I recognise we need one or two extra players but I'm certainly not going to be held to ransom.
“My advice to the football club is if we can't get the people we want, I don't want to pad it out with players who are not the right fit or not good enough.
"There are more hoops to jump through this year but I'm not involved at that level. I'm very happy with the players here - the numbers are the issue. We have an interest in a midfield player (Cambiasso) and if we can add another defender and a forward, I'd be happy."
Leicester face Sky Bet League Two side Shrewsbury in the Capital One Cup on Tuesday and Pearson revealed he is planning to give some younger players playing time with his son James among those in consideration.
"We might see younger players, yes, and a few did well in pre-season,” he said. “There will be a number of changes.
"Is my son in consideration? I don't know. You'll have to wait and see. I don't see why I will make an allowance to talk about him. He had a very good pre-season."