Strategic Delay and Rational Imitation in the Laboratory
This paper investigates market failures due to strategic delays. We test experimentally a discrete model of dynamic investment, where two privately informed agents have an option to invest at the time of their choice in the presence of waiting costs. The equilibrium outcome of our experimental game is characterized by efficient imitation but complete revelation of information is time consuming. In accordance with the equilibrium solution, subjects better informed take investment decision before subjects who are less informed and subjects’ decisions exhibit rational imitation. Still, subjects do not play exactly in accordance with the equilibrium sequence and we interpret their deviations from equilibrium play as an attempt to internalize the information externalities.
|Date of creation:||May 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Kahlaische Strasse 10, D-07745 Jena|
Phone: +49-3641-68 65
Fax: +49-3641-68 69 90
Web page: http://www.econ.mpg.de/
More information through EDIRC
|Order Information:|| Web: http://www.econ.mpg.de/english/research/ESI/discuss.php Email: |
When requesting a correction, please mention this item's handle: RePEc:esi:discus:2005-35. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karin Richter)The email address of this maintainer does not seem to be valid anymore. Please ask Karin Richter to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.