Barbos, Andrei (2012): De-synchornized Clocks in Preemption Games with Risky Prospects.
Download (295kB) | Preview
We study an optimal timing decision problem where an agent endowed with a risky investment opportunity trades the benefits of waiting for additional information against a potential loss in first-mover advantage. The players' clocks are de-synchronized in that they learn of the investment opportunity at different times. Previous literature has uncovered an inverted-U shaped relationship between a player's equilibrium expected expenditures and the measure of his competitors. This result no longer holds when the increase in the measure of players leads to a decrease in the degree of clock synchronization in the game. We show that the result reemerges if information arrives only at discrete times, and thus, a player's strategic beliefs are updated between decision times in a measurably meaningful way.
|Item Type:||MPRA Paper|
|Original Title:||De-synchornized Clocks in Preemption Games with Risky Prospects|
|Keywords:||Clock Games; Timing Games; Preemption|
|Subjects:||D - Microeconomics > D9 - Intertemporal Choice > D90 - General
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General
|Depositing User:||Andrei Barbos|
|Date Deposited:||24. Aug 2012 15:48|
|Last Modified:||10. May 2015 23:34|
Abreu, D. and M. K. Brunnermeier, 2002. "Synchronization Risk and Delayed Arbitrage," Journal of Financial Economics, 66, 341-360.
Abreu, D. and M. K. Brunnermeier, 2003. "Bubbles and Crashes," Econometrica, 71, 173-204.
Argenziano, R. and P. Schmidt-Dengler, 2012. "Clustering in N-Player Preemption Games," University of Essex.
Barbos, A., 2012. "Information Acquisition and Innovation under Competitive Presure," University of South Florida.
Bolton, P. and C. Harris, 1999. "Strategic Experimentation." Econometrica, 67, 349-374.
Brunnermeier, M.K. and J. Morgan, 2010. "Clock Games: Theory and Experiments," Games and Economic Behavior, 68, 532-550.
Camerer, C., M.J. Kang and D. Ray, 2010. "Anxiety and Learning in Dynamic and Static Clock Game Experiments," California Institute of Technology.
Chamley, C. and D. Gale, 1994. "Information Revelation and Strategic Delay in a Model of Investment," Econometrica, 62, 1065-1085.
Cripps, M, R. G. Keller, S. Rady, 2005. "Strategic Experimentation with Exponential Bandits," Econometrica, 73, 39-68.
Decamps, J-P. and T. Mariotti, 2004. "Investment Timing and Learning Externalities," Journal of Economic Theory, 118, 80-102.
Doblas-Madrid, A., 2012. "A Robust Model of Bubbles with Multidimensional Uncertainty," Econometrica, forthcoming.
Fudenberg, D., and J. Tirole, 1985. "Preemption and Rent Equalization in the Adoption of a New Technology," Review of Economic Studies, 52, 383-401.
Hoppe, H., 2000. "Second-mover advantages in the strategic adoption of new technology under uncertainty," International Journal of Industrial Organization, 18, 315-338.
Jensen, R., 1982. "Adoption and Diffusion of an Innovation of Uncertain Profitability," Journal of Economic Theory, 27, 182-193.
Lambrecht, B. and W. Perraudin , 2003. "Real options and preemption under incomplete information," Journal of Economic Dynamics and Control, 27, 619-643.
Park, A. and L. Smith, 2008. "Caller Number Five and Related Timing Games," Theoretical Economics, 3, 231-256.
Reinganum, J., 1981. "Dynamic Games of Innovation," Journal of Economic Theory, 25, 21-41.
Sahuguet, N., 2006. "Volunteering for Heterogeneous Tasks," Games and Economic Behavior, 56, 333--349.
Weeds, H., 2002. "Strategic Delay in a Real Options Model of R&D Competition," Review of Economic Studies, 69, 729-747.