Sequential Learning

Yair Antler, Daniel Bird and Santiago Oliveros

American Economic Journal: Microeconomics, 2023, vol. 15, issue 1, 399-433

Abstract: We develop a model in which two players sequentially and publicly examine a project. In our model the player who moves first can fabricate evidence to influence the second mover, which creates a moral hazard problem. We find that early strategic uncertainty can mitigate this problem. In particular, for intermediate prior beliefs about the project's quality, the Pareto-dominant equilibrium is in mixed strategies and consists of an early stage in which evidence may be fabricated and a later stage in which evidence is always authentic. Our findings shed light on the dynamics of R&D, quality assurance, and drug approval.

JEL-codes: D82 D83 L15 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/mic.20200352 (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20200352.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20200352.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Sequential Learning (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejmic:v:15:y:2023:i:1:p:399-433

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/mic.20200352

Access Statistics for this article

American Economic Journal: Microeconomics is currently edited by Johannes Hörner

More articles in American Economic Journal: Microeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().