Reputation concerns in risky experimentation

Arbeitspapier

We develop a general model, with the exponential bandit as a special case, in which high-ability agents are more likely to achieve early success but also learn faster that their project is not promising. These counteracting effects give rise to a signaling model in which the single-crossing condition fails but a double-crossing property holds. We characterize the unique D1 equilibrium under double-crossing condition, and show that it tends to produce pooling. Ability to identify good projects and ability to execute a good project have different implications for the equilibrium allocation. Our model also incorporates public news, which generates dynamic distortions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 1060

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Innovation and Invention: Processes and Incentives
• Subject: double-crossing property ; D1 equilibrium refinement ; dynamic signaling ; venture startups

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chen, Chia-hui ; Ishida, Junichiro ; Suen, Wing-chuen
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/230466
• Last update: 13.12.0033, 7:11 AM CET