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Preemption Games with Private Information

Author

Listed:
  • Francesco Squintani
  • Hugo Hopenhayn

    () (Economics University College London)

Abstract

Preemption games are widely used to model economic problems such as patent races. We introduce private information into these games and allow for this information to stochastically change over time. This reflects, e.g. how R&D competitors improve their innovations over time and keep these innovations secret before patenting them. The analysis initially appears intractable because of the complexity of the equilibrium updating of beliefs on opponents' information. However, we demonstrate the existence of a class of equilibria and calculate these equilibria in closed form. We find that the expected durations in these equilibria are longer than when players' information is public but, in some cases, shorter than in the collusive outcome. Hence, R&D secrecy slows down innovation disclosure. Copyright 2011, Oxford University Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Francesco Squintani & Hugo Hopenhayn, 2005. "Preemption Games with Private Information," 2005 Meeting Papers 80, Society for Economic Dynamics.
  • Handle: RePEc:red:sed005:80
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    Cited by:

    1. Francis Bloch & Simona Fabrizi & Steffen Lippert, 2015. "Learning and collusion in new markets with uncertain entry costs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 58(2), pages 273-303, February.
    2. Brunnermeier, Markus K. & Morgan, John, 2010. "Clock games: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 68(2), pages 532-550, March.
    3. Smirnov, Vladimir & Wait, Andrew, 2015. "Innovation in a generalized timing game," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 23-33.
    4. Ufuk Akcigit & Qingmin Liu, 2011. "The Role of Information in Competitive Experimentation," Levine's Working Paper Archive 786969000000000321, David K. Levine.
    5. de Paula, Áureo, 2009. "Inference in a synchronization game with social interactions," Journal of Econometrics, Elsevier, pages 56-71.
    6. Bobtcheff, Catherine & Mariotti, Thomas, 2012. "Potential competition in preemption games," Games and Economic Behavior, Elsevier, vol. 75(1), pages 53-66.
    7. Heidhues, Paul & Rady, Sven & Strack, Philipp, 2015. "Strategic experimentation with private payoffs," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 531-551.
    8. Damien Besancenot & Radu Vranceanu, 2015. "Fear Of Novelty: A Model Of Scientific Discovery With Strategic Uncertainty," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1132-1139, April.
    9. Bobtcheff, Catherine & Bolte, Jérôme & Mariotti, Thomas, 2013. "Researcher's Dilemma," TSE Working Papers 13-377, Toulouse School of Economics (TSE), revised Sep 2015.
    10. R. Anton Braun & Toshihiro Okada & Nao Sudou, 2006. "U.S. R&D and Japanese Medium Term Cycles," Bank of Japan Working Paper Series 06-E-6, Bank of Japan.
    11. Keller, Godfrey & Rady, Sven, 2015. "Breakdowns," Theoretical Economics, Econometric Society.
    12. Andres Zambrano, 2015. "Motivating Informed Decisions," DOCUMENTOS CEDE 012576, UNIVERSIDAD DE LOS ANDES-CEDE.
    13. Schmidbauer, Eric, 2017. "Multi-period competitive cheap talk with highly biased experts," Games and Economic Behavior, Elsevier, vol. 102(C), pages 240-254.
    14. Eric Schmidbauer, 2016. "Multi-period competitive cheap talk with very biased experts," Working Papers 2016-04, University of Central Florida, Department of Economics.

    More about this item

    Keywords

    timing games; patent races; private information;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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