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Competitive experimentation with private information : the survivor's curse
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Moscarini, Giuseppe and Squintani, Francesco (2010) Competitive experimentation with private information : the survivor's curse. Journal of Economic Theory, Vol.145 (No.2). pp. 639-660. doi:10.1016/j.jet.2009.12.001 ISSN 0022-0531.
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Official URL: http://dx.doi.org/10.1016/j.jet.2009.12.001
Abstract
We study a winner-take-all R&D race between two firms that are privately informed about the arrival rate of an invention. Over time, each firm only observes whether the opponent left the race or not. The equilibrium displays a strong herding effect, that we call a ‘survivor's curse.’ Unlike in the case of symmetric information, the two firms may quit the race (nearly) simultaneously even when their costs and benefits for research differ significantly.
Item Type: | Journal Article | ||||
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Divisions: | Faculty of Social Sciences > Economics | ||||
Journal or Publication Title: | Journal of Economic Theory | ||||
Publisher: | Academic Press | ||||
ISSN: | 0022-0531 | ||||
Official Date: | 2010 | ||||
Dates: |
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Volume: | Vol.145 | ||||
Number: | No.2 | ||||
Page Range: | pp. 639-660 | ||||
DOI: | 10.1016/j.jet.2009.12.001 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published |
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