Endogenous timing game with non-monotonic reaction functions
AbstractThe aim of this paper is to generalize the endogenous timing game proposed by Hamilton and Slutsky (1990) to cases where the reaction functions are non-motononic, as for instance in the literature on contest. Following the taxonomy of social dilemma provided by Eaton (2004) we consider several pos- sible situations depending on the nature of interactions (plain complementarity or plain substituability and strategic complementarity or strategic substitutability). Under the assumptions of the existence and the uniqueness of the Nash and Stackelberg equilibria, we highlight the presence of a ﬁrst-mover advantage or a second-mover incentive only depending on the nature of cross-eﬀects in players’ payoﬀ functions and the slopes of their reaction functions at the Nash equilibrium of the static game. These properties allow us to determine rigorously the Subgame Perfect Nash Equilibrium (SPNE) in the ten studied situations. We establish under which conditions on the nature of interactions a leader emerges at the SPNE
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Bibliographic InfoPaper provided by CERDI in its series Working Papers with number 201017.
Date of creation: 2010
Date of revision:
ﬁrst-mover advantage; endogenous timing game; second-mover incentive; Subgame Perfect Nash Equilibrium;
Other versions of this item:
- Grégoire Rota-Graziosi & Magnus Hoffmann, 2011. "Endogenous timing game with non-monotonic reaction functions," Working Papers halshs-00553130, HAL.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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