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Learning to Disagree in a Game of Experimentation

Bonatti, Alessandro and Hörner, Johannes (2017) Learning to Disagree in a Game of Experimentation. Journal of Economic Theory. (In Press)

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Official URL: http://tse-fr.eu/pub/31601

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.

Item Type: Article
Language: English
Date: 2017
Refereed: Yes
Uncontrolled Keywords: Experimentation, free-riding, mixed strategies, monitoring, delay
JEL codes: C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
D83 - Search; Learning; Information and Knowledge; Communication; Belief
O33 - Technological Change - Choices and Consequences; Diffusion Processes
Subjects: B- ECONOMIE ET FINANCE
Divisions: Toulouse School of Economics - TSE
Site: UT1
Date Deposited: 30 Mar 2017 11:48
Last Modified: 31 Mar 2017 08:07
OAI ID: oai:tse-fr.eu:31601
URI: http://publications.ut-capitole.fr/id/eprint/23336

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