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Clock Games: Theory and Experiments

  • Markus K Brunnermeier
  • John Morgan

Timing is crucial in situations ranging from product introductions, to currency attacks, to starting a revolution. These settings share the feature that payoffs depend critically on the timing of moves of a few other key players—and these are uncertain. To capture this, we introduce the notion of clock games and experimentally test them. Each player’s clock starts on receiving a signal about a payoff-relevant state variable. Since the timing of the signals is random, clocks are de-synchronized. A player must decide how long, if at all, to delay his move after receiving the signal. We show that (i) equilibrium is always characterized by strategic delay—regardless of whether moves are observable or not; (ii) delay decreases as clocks become more synchronized and increases as information becomes more concentrated; (iii) When moves are observable, players “herd†immediately after any player makes a move. We then show, in a series of experiments, that key predictions of the model are consistent with observed behavior.

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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 122247000000000401.

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Date of creation: 02 Sep 2004
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Handle: RePEc:cla:levrem:122247000000000401
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  8. Markus K Brunnermeier & John Morgan, 2004. "Clock Games: Theory and Experiments," Levine's Bibliography 122247000000000401, UCLA Department of Economics.
  9. Andreas Park & Lones Smith, 2004. "Caller Number Five: Timing Games that Morph From One Form to Another," 2004 Meeting Papers 871, Society for Economic Dynamics.
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  19. Dilip Abreu & Markus K. Brunnermeier, 2003. "Bubbles and Crashes," Econometrica, Econometric Society, vol. 71(1), pages 173-204, January.
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