Investment Dynamics with Common and Private Values 1
نویسندگان
چکیده
We study a dynamic investment game with two-dimensional signals, where each firm observes its continuously distributed idiosyncratic cost of investment and a discrete signal correlated with common investment returns. We demonstrate that the one-step property holds and provide an equilibrium existence/characterization result. “Reversals” are possible, where a large number of firms investing in a given round becomes bad news about investment returns. Welfare is compared to static and rigidtiming benchmarks, and computed for large economies. JEL classification: C73, D8
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