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Decision time and steps of reasoning in a competitive market entry game

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  • Lindner, Florian

Abstract

Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects’ risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions: (i) the level of strategic sophistication, which has a positive impact on entry decisions, and (ii) the impact of time pressure, which has a (partly) negative influence on entry rates. Furthermore, when ranks are determined using a real effort task, differences in entry rates are explainable by higher competitiveness of males. Additionally, I show that individual characteristics are more important for the entry decision in more competitive environments.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 122 (2014)
Issue (Month): 1 ()
Pages: 7-11

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Handle: RePEc:eee:ecolet:v:122:y:2014:i:1:p:7-11

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Market entry game; Time pressure; Level-k reasoning; Risk; Competitiveness; Experiment;

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