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Learning to Disagree in a Game of Experimentation

Author

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  • Bonatti, Alessandro
  • Hörner, Johannes

Abstract

We analyze strategic experimentation in which information arrives through fully revealing, publicly observable “breakdowns.” When actions are hidden, there exists a unique symmetric equilibrium that involves randomization over stopping times. With two players, this is the unique equilibrium. Randomization leads to dispersion in actions and to belief disagreement on the equilibrium path. The resulting lack of coordination has significant welfare consequences. In contrast, when actions are observable, the equilibrium is pure and welfare improves.

Suggested Citation

  • Bonatti, Alessandro & Hörner, Johannes, 2017. "Learning to Disagree in a Game of Experimentation," TSE Working Papers 17-791, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:31600
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    Cited by:

    1. Farzad Pourbabaee, 2022. "Robust experimentation in the continuous time bandit problem," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 151-181, February.
    2. Daron Acemoglu & Asuman Ozdaglar & Sarath Pattathil, 2023. "Learning, Diversity and Adaptation in Changing Environments: The Role of Weak Links," NBER Working Papers 31214, National Bureau of Economic Research, Inc.
    3. Wong, Tsz-Ning & Yang, Lily Ling, 2021. "Dynamic expert incentives in teams," Games and Economic Behavior, Elsevier, vol. 125(C), pages 27-47.
    4. Bonatti, Alessandro & Hörner, Johannes, 2017. "Learning to disagree in a game of experimentation," Journal of Economic Theory, Elsevier, vol. 169(C), pages 234-269.
    5. Joshua L. Krieger, 2021. "Trials and Terminations: Learning from Competitors’ R&D Failures," Management Science, INFORMS, vol. 67(9), pages 5525-5548, September.
    6. Azoulay, Pierre & Bonatti, Alessandro & Krieger, Joshua L., 2017. "The career effects of scandal: Evidence from scientific retractions," Research Policy, Elsevier, vol. 46(9), pages 1552-1569.
    7. Aghamolla, Cyrus & Hashimoto, Tadashi, 2020. "Information arrival, delay, and clustering in financial markets with dynamic freeriding," Journal of Financial Economics, Elsevier, vol. 138(1), pages 27-52.
    8. Hendrik Hakenes & Svetlana Katolnik, 2018. "Optimal Team Size and Overconfidence," Group Decision and Negotiation, Springer, vol. 27(4), pages 665-687, August.
    9. Georgiadis, George, 2017. "Deadlines and infrequent monitoring in the dynamic provision of public goods," Journal of Public Economics, Elsevier, vol. 152(C), pages 1-12.
    10. Thomas Greve & Hans Keiding, 2023. "A model of privately funded public research," Journal of Economics, Springer, vol. 140(1), pages 63-91, September.
    11. Gustavo Manso & Farzad Pourbabaee, 2022. "The Impact of Connectivity on the Production and Diffusion of Knowledge," Papers 2202.00729, arXiv.org.
    12. Matros, Alexander & Ponomareva, Natalia & Smirnov, Vladimir & Wait, Andrew, 2022. "Search without looking," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).
    13. Farzad Pourbabaee, 2021. "Robust Experimentation in the Continuous Time Bandit Problem," Papers 2104.00102, arXiv.org.
    14. Diekert, Florian K., 2017. "Threatening thresholds? The effect of disastrous regime shifts on the non-cooperative use of environmental goods and services," Journal of Public Economics, Elsevier, vol. 147(C), pages 30-49.
    15. Chen, Yi, 2020. "A revision game of experimentation on a common threshold," Journal of Economic Theory, Elsevier, vol. 186(C).
    16. Mayskaya, Tatiana & Nikandrova, Arina, 2023. "The dark side of transparency: When hiding in plain sight works," Journal of Economic Theory, Elsevier, vol. 212(C).
    17. Wagner, Peter A. & Klein, Nicolas, 2022. "Strategic investment and learning with private information," Journal of Economic Theory, Elsevier, vol. 204(C).

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    Keywords

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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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