Competitive experimentation with private information: The survivor's curse
AbstractWe study a winner-take-all R&D race between two firms that are privately informed about the arrival rate of an invention. Over time, each firm only observes whether the opponent left the race or not. The equilibrium displays a strong herding effect, that we call a 'survivor's curse.' Unlike in the case of symmetric information, the two firms may quit the race (nearly) simultaneously even when their costs and benefits for research differ significantly.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 145 (2010)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/inca/622869
Learning Experimentation Private information Survivor's curse;
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- Ufuk Akcigit & Qingmin Liu, 2011. "The Role of Information in Competitive Experimentation," NBER Working Papers 17602, National Bureau of Economic Research, Inc.
- Ufuk Akcigit & Qingmin Liu, 2011. "The Role of Information in Competitive Experimentation," PIER Working Paper Archive 11-038, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Keller, Godfrey & Rady, Sven, 2012.
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
396, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Ufuk Akcigit & Qingmin Liu, 2011. "The Role of Information in Competitive Experimentation," Levine's Working Paper Archive 786969000000000321, David K. Levine.
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