The effect of endogenous timing on coordination under asymmetric information: An experimental study

Francesco Brindisi, Boğaçhan Çelen () and Kyle Hyndman

Games and Economic Behavior, 2014, vol. 86, issue C, 264-281

Abstract: This paper investigates the role of endogenous timing of decisions on coordination under asymmetric information. In the equilibrium of a global coordination game, where players choose the timing of their decision, a player who has sufficiently high beliefs about the state of the economy undertakes an investment without delay. This decision (potentially) triggers an investment by the other player whose beliefs would have led to inaction otherwise. Endogenous timing has two distinct effects on coordination: a learning effect (early decisions reveal information) and a complementarity effect (early decisions eliminate strategic uncertainty for late movers). The experiments that we conduct to test these theoretical results show that the learning effect of timing has more impact on the subjects' behavior than the complementarity effect. We also observe that subjects' welfare improves significantly under endogenous timing.

Keywords: Coordination; Delay; Information; Global games; Experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D62 D82 D83 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:86:y:2014:i:c:p:264-281

DOI: 10.1016/j.geb.2014.03.018

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