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De-synchronized clocks in preemption games with risky prospects

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  • Barbos, Andrei

Abstract

We study an optimal timing decision problem where an agent endowed with a risky investment opportunity trades the benefits of waiting for additional information against a potential loss in first-mover advantage. The players’ clocks are de-synchronized in that they learn of the investment opportunity at different times. Thus, the model captures situations where players are heterogeneous with respect to the amount of information that they possess at any instant. In this framework, previous literature has uncovered an inverted-U shaped relationship between a player’s equilibrium expected expenditures and the measure of his competitors. This result no longer holds when the increase in the measure of players leads to a decrease in the degree of clock synchronization in the game. We show that the result reemerges if information arrives only at discrete times, and thus, a player’s strategic beliefs are updated between decision times in a measurably meaningful way.

Suggested Citation

  • Barbos, Andrei, 2013. "De-synchronized clocks in preemption games with risky prospects," Mathematical Social Sciences, Elsevier, vol. 65(3), pages 203-216.
  • Handle: RePEc:eee:matsoc:v:65:y:2013:i:3:p:203-216
    DOI: 10.1016/j.mathsocsci.2012.11.005
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    References listed on IDEAS

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    1. Andrei Barbos, 2015. "Information Acquisition and Innovation under Competitive Pressure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(2), pages 325-347, June.
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    More about this item

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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