Arbeitspapier

A war of attrition with experimenting players

A standard incomplete-information war of attrition is extended to incorporate experimentation and private learning. We obtain a characterization of all equilibria in this extended setup and use this setup to illuminate a tradeoff between short-run and long-run gains of experimentation. The extension yields qualitative impacts on the strategic nature of the problem. The option value of experimentation serves as a credible commitment device to stay in the game, which is instrumental in inducing the other player to concede earlier. As a direct consequence, there may be an equilibrium in which the strictly less efficient player can get the better end of the deal, implying that slow learning can be a blessing in this type of competition. Our analysis gives insight into why an apparently inferior technology often survives in many standards competitions and more broadly offers implications for technology adoption and industry dynamics. We also show that there is a non-degenerate set of parameters that can support the Pareto-efficient allocation as an equilibrium outcome whereas it is never possible in the standard setup.

Sprache
Englisch

Erschienen in
Series: ISER Discussion Paper ; No. 1014

Klassifikation
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Thema
war of attrition
bandit problem
experimentation
standards competitions
private learning

Ereignis
Geistige Schöpfung
(wer)
Chen, Chia-Hui
Ishida, Junichiro
Ereignis
Veröffentlichung
(wer)
Osaka University, Institute of Social and Economic Research (ISER)
(wo)
Osaka
(wann)
2017

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Chen, Chia-Hui
  • Ishida, Junichiro
  • Osaka University, Institute of Social and Economic Research (ISER)

Entstanden

  • 2017

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