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Potential competition in preemption games

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  • Bobtcheff, Catherine
  • Mariotti, Thomas

Abstract

We study a preemption game in which two potential competitors come into play at some random secret times. The presence of a competitor is revealed to her opponent only when the former moves, which terminates the game. We show that all perfect Bayesian equilibria give rise to the same distribution of playersʼ moving times, and we explicitly construct such an equilibrium. The intensity of competition is nonmonotonic over time, and private information tends to alleviate rent dissipation. Our results have a natural interpretation in terms of eroding reputations.

Suggested Citation

  • Bobtcheff, Catherine & Mariotti, Thomas, 2012. "Potential competition in preemption games," Games and Economic Behavior, Elsevier, vol. 75(1), pages 53-66.
    • Handle: RePEc:eee:gamebe:v:75:y:2012:i:1:p:53-66
    DOI: 10.1016/j.geb.2011.11.002
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    Cited by:

    1. Smirnov, Vladimir & Wait, Andrew, 2021. "Preemption with a second-mover advantage," Games and Economic Behavior, Elsevier, vol. 129(C), pages 294-309.
    2. Ozdenoren, Emre & Hoppe-Wewetzer, Heidrun C. & Katsenos, Georgios, 2019. "Experimentation, Learning, and Preemption," CEPR Discussion Papers 13483, C.E.P.R. Discussion Papers.
    3. Thomas, Caroline, 2019. "Experimentation with reputation concerns – Dynamic signalling with changing types," Journal of Economic Theory, Elsevier, vol. 179(C), pages 366-415.
    4. Rossella Argenziano & Philipp Schmidt-Dengler, 2014. "Clustering In N-Player Preemption Games," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 368-396, April.
    5. Hitoshi Matsushima, 2020. "Recurrent Preemption Games," DSSR Discussion Papers 110, Graduate School of Economics and Management, Tohoku University.
    6. Bobtcheff, Catherine & Mariotti, Thomas & Levy, Raphaël, 2021. "Negative results in science: Blessing or (winner’s) curse," TSE Working Papers 21-1202, Toulouse School of Economics (TSE).
    7. Sun, Chia-Hung, 2023. "Timing of technology adoption in the presence of patent licensing," Economic Modelling, Elsevier, vol. 127(C).
    8. Lavrutich, Maria N. & Huisman, Kuno J.M. & Kort, Peter M., 2016. "Entry deterrence and hidden competition," Journal of Economic Dynamics and Control, Elsevier, vol. 69(C), pages 409-435.
    9. Schmidbauer, Eric, 2017. "Multi-period competitive cheap talk with highly biased experts," Games and Economic Behavior, Elsevier, vol. 102(C), pages 240-254.
    10. Smirnov, Vladimir & Wait, Andrew, 2015. "Innovation in a generalized timing game," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 23-33.
    11. Thomas, Caroline, 2020. "Stopping with congestion and private payoffs," Journal of Mathematical Economics, Elsevier, vol. 91(C), pages 18-42.
    12. Gorno, Leandro & Iachan, Felipe S., 2020. "Competitive real options under private information," Journal of Economic Theory, Elsevier, vol. 185(C).
    13. Eric Schmidbauer, 2016. "Multi-period competitive cheap talk with very biased experts," Working Papers 2016-04, University of Central Florida, Department of Economics.
    14. Rossella Argenziano & Philipp Schmidt-Dengler, 2014. "Clustering In N-Player Preemption Games," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 368-396, 04.
    15. Smirnov, Vladimir & Wait, Andrew, 2018. "Blocking in a timing game with asymmetric players," Working Papers 2018-05, University of Sydney, School of Economics, revised May 2019.

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    More about this item

    Keywords

    Preemption games; Potential competition; Private information;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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