On games of strategic experimentation
Salomon, Antoine; Vieille, Nicolas; Rosenberg, Dinah (2013), On games of strategic experimentation, Games and Economic Behavior, 82, p. 31–51. http://dx.doi.org/10.1016/j.geb.2013.06.006
TypeArticle accepté pour publication ou publié
External document linkhttps://hal.archives-ouvertes.fr/hal-00579613
Journal nameGames and Economic Behavior
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Abstract (EN)We study a class of symmetric strategic experimentation games. Each of two players faces an (exponential) two-armed bandit problem, and must decide when to stop experimenting with the risky arm. The equilibrium amount of experimentation depends on the degree to which experimentation outcomes are observed, and on the correlation between the two individual bandit problems. When experimentation outcomes are public, the game is basically one of strategic complementarities. When experimentation decisions are public, but outcomes are private, the strategic interaction is more complex. We fully characterize the equilibrium behavior in both informational setups, leading to a clear comparison between the two. In particular, equilibrium payoffs are higher when equilibrium outcomes are public.
Subjects / KeywordsStrategic experimentation; Optimal stopping; Real options; Incomplete information
Showing items related by title and author.
Cardaliaguet, Pierre; Rainer, Catherine; Rosenberg, Dinah; Vieille, Nicolas (2013-07) Article accepté pour publication ou publié