Strategic learning in teams

Nicolas Klein

Games and Economic Behavior, 2013, vol. 82, issue C, 636-657

Abstract: This paper analyzes a two-player game of strategic experimentation with three-armed exponential bandits in continuous time. Players play bandits of identical types, with one arm that is safe in that it generates a known payoff, whereas the likelihood of the risky armsʼ yielding a positive payoff is initially unknown. When the types of the two risky arms are perfectly negatively correlated, the efficient policy is an equilibrium if and only if the stakes are high enough. If the negative correlation is imperfect and stakes are high, there exists an equilibrium that leads to efficiency for optimistic enough prior beliefs.

Keywords: Strategic experimentation; Three-armed bandit; Exponential distribution; Poisson process; Bayesian learning; Markov perfect equilibrium; R&D teams (search for similar items in EconPapers)
JEL-codes: C73 D83 O32 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:82:y:2013:i:c:p:636-657

DOI: 10.1016/j.geb.2013.09.008

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