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Participation Games: Market Entry, Coordination and the Beautiful Blonde

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  • Anderson, Simon P
  • Engers, Maxim

Abstract

We find the Nash equilibria for monotone n-player symmetric games where each player chooses whether to participate. Examples include market entry games, coordination games, and the bar-room game depicted in the movie 'A Beautiful Mind'. The symmetric Nash equilibrium involves excessive participation (a common property resource problem) if participants’ payoffs are decreasing (in the number of participants), and insufficient participation if payoffs are increasing. With decreasing payoffs there can be many equilibria, but with increasing payoffs there are only three. Some comparative static properties of changing one player’s participation payoffs are counter-intuitive, especially with more than two players.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5241.

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Date of creation: Sep 2005
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Handle: RePEc:cpr:ceprdp:5241

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Keywords: common property resource problem; comparative statics; coordination; market entry; mixed strategy equilibrium; Nash equilibrium;

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References

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  1. Elie Tamer & Federico Ciliberto, 2004. "Market Structure and Multiple Equilibria in Airline Markets," 2004 Meeting Papers 52, Society for Economic Dynamics.
  2. Vickrey, William S. & Anderson, Simon P. & Braid, Ralph M., 1999. "Spatial competition, monopolistic competition, and optimum product diversity," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 953-963, October.
  3. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 2001. "Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium," Games and Economic Behavior, Elsevier, vol. 34(2), pages 177-199, February.
  4. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
  5. Jacob K Goeree & Charles A Holt, 2004. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," Levine's Working Paper Archive 618897000000000900, David K. Levine.
  6. Crawford, Vincent P., 1985. "Learning behavior and mixed-strategy Nash equilibria," Journal of Economic Behavior & Organization, Elsevier, vol. 6(1), pages 69-78, March.
  7. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  8. Crawford, Vincent P, 1974. "Learning the Optimal Strategy in a Zero-Sum Game," Econometrica, Econometric Society, vol. 42(5), pages 885-91, September.
  9. Sundali, James A. & Rapoport, Amnon & Seale, Darryl A., 1995. "Coordination in Market Entry Games with Symmetric Players," Organizational Behavior and Human Decision Processes, Elsevier, vol. 64(2), pages 203-218, November.
  10. Andrew Sweeting, 2005. "Coordination Games, Multiple Equilibria and the Timing of Radio Commercials," 2005 Meeting Papers 490, Society for Economic Dynamics.
  11. Andrew Cohen & Ron Borzekowski, 2005. "Estimating Strategic Complementarities in Credit Union’s Outsourcing Decisions," Computing in Economics and Finance 2005 410, Society for Computational Economics.
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Cited by:
  1. Shimizu, Hiroshi & Wakutsu, Naohiko, 2014. "Entrepreneurial Spin-Outs and Vanishing Technological Trajectory: Laser Diodes in the U.S. and Japan," IIR Working Paper 13-21, Institute of Innovation Research, Hitotsubashi University.
  2. Schultz, Christian, 2009. "Transparency and product variety," Economics Letters, Elsevier, vol. 102(3), pages 165-168, March.
  3. Frank, Joshua & Sohn, Saeyoon, 2011. "A behavioral economic analysis of excess entry in arts labor markets," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 265-273, May.
  4. Pim Heijnen, 2009. "On the probability of breakdown in participation games," Social Choice and Welfare, Springer, vol. 32(3), pages 493-511, March.
  5. Pietro Dindo & Jan Tuinstra, 2011. "A Class of Evolutionary Models for Participation Games with Negative Feedback," Computational Economics, Society for Computational Economics, vol. 37(3), pages 267-300, March.

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