Competitive experimentation with private information: The survivor's curse

Giuseppe Moscarini and Francesco Squintani

Journal of Economic Theory, 2010, vol. 145, issue 2, 639-660

Abstract: We study a winner-take-all R&D race between two firms that are privately informed about the arrival rate of an invention. Over time, each firm only observes whether the opponent left the race or not. The equilibrium displays a strong herding effect, that we call a 'survivor's curse.' Unlike in the case of symmetric information, the two firms may quit the race (nearly) simultaneously even when their costs and benefits for research differ significantly.

Keywords: Learning; Experimentation; Private; information; Survivor's; curse (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:145:y:2010:i:2:p:639-660

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