Innovate versus imitate: Theory and experimental evidence
John Duffy () and
Journal of Economic Behavior & Organization, 2020, vol. 177, issue C, 727-751
We model and experimentally evaluate the trade-off between innovation and imitation commonly faced by firms. Innovation involves searching for a high payoff opportunity, but paying a cost in order to do so. Imitation involves avoiding that search cost and copying the most successful payoff opportunity uncovered thus far. We formulate a novel model of sequential innovation versus imitation decisions made by a group of n regret minimizing agents. We analyze the consequences of complete versus incomplete information about the distribution of payoffs from innovation on agents’ decisions. We then study these predictions in a laboratory experiment where we find evidence in support of our theoretical predictions.
Keywords: Innovation; Imitation; Risk; Ambiguity; Regret minimization; Experimental economics (search for similar items in EconPapers)
JEL-codes: C91 C92 D21 D81 O31 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:177:y:2020:i:c:p:727-751
Access Statistics for this article
Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.
More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().