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Experimentation, Learning, and Preemption

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  • Ozdenoren, Emre
  • Hoppe-Wewetzer, Heidrun C.
  • Katsenos, Georgios

Abstract

This paper offers a model of experimentation and learning with uncertain outcomes as suggested by Arrow (1969). Investigating a two-player stopping game, we show that competition leads to less experimentation, which extends existing results for preemption games to the context of experimentation with uncertain outcomes. Furthermore, we inquire about the extent of experimentation under two information settings: when the researchers share information about the outcomes of their experiments and when they do not share such information. We discover that the sharing of information can generate more experimentation and higher value for a relatively wide range of parameters. We trace this finding to the stronger ability to coordinate on the information obtained through experimentation when it is shared. Our model allows to shed light on recent criticism of the current scientific system.

Suggested Citation

  • Ozdenoren, Emre & Hoppe-Wewetzer, Heidrun C. & Katsenos, Georgios, 2019. "Experimentation, Learning, and Preemption," CEPR Discussion Papers 13483, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13483
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    References listed on IDEAS

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    7. Bobtcheff, Catherine & Mariotti, Thomas, 2012. "Potential competition in preemption games," Games and Economic Behavior, Elsevier, vol. 75(1), pages 53-66.
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    9. Moscarini, Giuseppe & Squintani, Francesco, 2010. "Competitive experimentation with private information: The survivor's curse," Journal of Economic Theory, Elsevier, vol. 145(2), pages 639-660, March.
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    Cited by:

    1. Bobtcheff, Catherine & Mariotti, Thomas & Levy, Raphaël, 2021. "Negative results in science: Blessing or (winner’s) curse," TSE Working Papers 21-1202, Toulouse School of Economics (TSE).

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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