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Self-confidence and survival

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  • Bar-Isaac, Heski

Abstract

We consider the impact of history on the survival of a monopolist selling single units in discrete time periods, whose quality is learned slowly. If the seller learns her own quality at the same rate as customers, a sufficiently bad run of luck could induce her to stop selling. When she knows her quality, a good seller never stops selling. Furthermore, a seller with positive, though imperfect, information sells for the same number of periods whether her information is private or public. We further consider the robustness of the central result when the seller's opportunities for strategic behaviour are limited.

Suggested Citation

  • Bar-Isaac, Heski, 2001. "Self-confidence and survival," LSE Research Online Documents on Economics 19329, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:19329
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    File URL: http://eprints.lse.ac.uk/19329/
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Reputation; signalling; learning; one-armed bandit; monopolist; private information; public information.;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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