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Potential competition in preemption games

Catherine Bobtcheff () and Thomas Mariotti

Games and Economic Behavior, 2012, vol. 75, issue 1, 53-66

Abstract: We study a preemption game in which two potential competitors come into play at some random secret times. The presence of a competitor is revealed to her opponent only when the former moves, which terminates the game. We show that all perfect Bayesian equilibria give rise to the same distribution of playersʼ moving times, and we explicitly construct such an equilibrium. The intensity of competition is nonmonotonic over time, and private information tends to alleviate rent dissipation. Our results have a natural interpretation in terms of eroding reputations.

Keywords: Preemption games; Potential competition; Private information (search for similar items in EconPapers)
JEL-codes: C73 D82 (search for similar items in EconPapers)
Date: 2012
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Working Paper: Potential Competition in Preemption Games (2010) Downloads
Working Paper: Potential Competition in Preemption Games (2010) Downloads
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DOI: 10.1016/j.geb.2011.11.002

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