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War of Attrition: Evidence from a Laboratory Experiment on Market Exit

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Author Info

  • RYan Oprea

    ()
    (University Of California, Santa Cruz)

  • Bart J. Wilson

    ()
    (Economic Science Institute, Chapman University)

  • Artie Zillante

    (Uinversity of North Carolina, Charlotte)

Abstract

We report an experiment designed to study whether inecient rms are systematically driven from overcrowded markets. We implement a series of 3800 wars of attrition of a type modeled in Fudenberg and Tirole (1986). Exit tends to be ecient and exit times conform reasonably well to point predictions of the model. Moreover, we nd that subjects respond similarly to implementations framed in terms of losses as they do to those framed in terms of gains.

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Bibliographic Info

Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 08-02.

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Length: 27 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:chu:wpaper:08-02

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Keywords: Market exit; war of attrition; experimental economics;

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  1. Amnon Rapoport & Darryl A. Seale & Ido Erev & James A. Sundali, 1998. "Equilibrium Play in Large Group Market Entry Games," Management Science, INFORMS, vol. 44(1), pages 119-141, January.
  2. Barry Nalebuff & John G. Riley, 1984. "Asymmetric Equilibrium in the War of Attrition," UCLA Economics Working Papers 317, UCLA Department of Economics.
  3. Rapoport, Amnon & Seale, Darryl A. & Winter, Eyal, 2002. "Coordination and Learning Behavior in Large Groups with Asymmetric Players," Games and Economic Behavior, Elsevier, vol. 39(1), pages 111-136, April.
  4. Eyal Winter & Amnon Rapoport & Darryl A. Seale, 2000. "An experimental study of coordination and learning in iterated two-market entry games," Economic Theory, Springer, vol. 16(3), pages 661-687.
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