Entry and exit decisions under public and private information: an experiment

Aleksei Chernulich (), John Horowitz (), Jean Paul Rabanal (), Olga Rud () and Manizha Sharifova ()
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Aleksei Chernulich: New York University Abu Dhabi
John Horowitz: Ball State University
Jean Paul Rabanal: University of Stavanger
Olga Rud: University of Stavanger
Manizha Sharifova: University of the Pacific

Experimental Economics, 2023, vol. 26, issue 2, No 5, 339-356

Abstract: Abstract We design an experiment to study how reversible entry decisions are affected by public and private payoff disclosure policies. In our environment, subjects choose between a risky payoff, which evolves according to an autoregressive process, and a constant payoff. The treatments vary the information disclosure rule on the risky payoff, such that in the public information treatment the risky payoff is always observable, while in the private information treatment, the risky payoff is observable only to the participants who enter the market. We find that under private information, market entry is higher, which suggests that subjects engage in exploration and place value on information.

Keywords: Experiment; Entry and exit decisions; Bandit problems; Information provision; Forecasting (search for similar items in EconPapers)
JEL-codes: C91 D81 D83 D84 G11 G17 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10683-022-09764-9

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