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Decision time and steps of reasoning in a competitive market entry game

  • Lindner, Florian

Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects’ risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions: (i) the level of strategic sophistication, which has a positive impact on entry decisions, and (ii) the impact of time pressure, which has a (partly) negative influence on entry rates. Furthermore, when ranks are determined using a real effort task, differences in entry rates are explainable by higher competitiveness of males. Additionally, I show that individual characteristics are more important for the entry decision in more competitive environments.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165176513004667
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 122 (2014)
Issue (Month): 1 ()
Pages: 7-11

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Handle: RePEc:eee:ecolet:v:122:y:2014:i:1:p:7-11
DOI: 10.1016/j.econlet.2013.10.019
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  16. 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.
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