Strategic investment and learning with private information

Peter A. Wagner and Nicolas Klein

Journal of Economic Theory, 2022, vol. 204, issue C

Abstract: We study social learning from actions and outcomes. Agents learn about future returns through privately observed signals, others' investment decisions and public experimentation outcomes when returns are realized. We characterize symmetric equilibria, and relate the extent of strategic delay of investments in equilibrium to the primitives of the information structure. Agents invest without delay in equilibrium when the most optimistic interim belief exceeds a threshold. Otherwise, delay in investments induces a learning feedback that may either raise or depress beliefs and investment choices. We show that, although ours is a strategic-experimentation game of pure informational externalities, private information may increase ex-ante welfare.

Keywords: Social learning; Investment timing; Strategic delay; Experimentation; Signaling (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Strategic investment and learning with private information (2018)
Working Paper: Strategic Investment and Learning with Private Information (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:204:y:2022:i:c:s0022053122001132

DOI: 10.1016/j.jet.2022.105523

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