Competitive experimentation with private information: The survivor's curse

Competitive Experimentation with Private Information: the Survivor's Curse By

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 t...

Competitive Experimentation and Private Information

Level-k Auctions: Can a Non-Equilibrium Model of Strategic Thinking Explain the Winner's Curse and Overbidding in Private-Value Auctions?

This paper proposes a structural non-equilibrium model of initial responses to incompleteinformation games based on "level-k" thinking, which describes behavior in many experiments with complete-information games. We derive the model's implications in firstand second-price auctions with general information structures, compare them to equilibrium and Eyster and Rabin's (2005) "cursed equilibrium...

Dutch Disease, Rentier State, and Resource Curse: A Characteristic Triangle and Ultra Challenge in the Iranian Economy

O wning Natural resources has been beneficial for some Countries, but hurtful for some others. Optimum management of natural resources in the former group has enhanced economic growth, bad governance, however, has led to Dutch Disease in the latter group. Bad governance in Iran has created Dutch Disease, Rentier State, and Resource Curse, DRR as a characteristic triangle. As the Iran...

Second - price common value auctions with uncertainty , private and public information : experimental evidence ∗

We conduct a laboratory experiment of second-price sealed bid auctions of a common value good with two bidders. Bidders face three different types of information: common uncertainty (unknown information), private information (known by one bidder) and public information (known by both bidders), and auctions differ on the relative importance of these three types of information. We find that subje...