Strategic delay and information cascades

Edward Cartwright

Journal of Economics, 2015, vol. 114, issue 1, 63-74

Abstract: In a setting where agents must choose between two investments, Zhang (in RAND J Econ 28:188–205, 1997 ) proposed an equilibrium in which there is strategic delay. This equilibrium relied upon there being an information cascade. We shall demonstrate that an information cascade need not generally occur. It will only occur if and only if the cost of investing takes relatively extreme values. Taking this into account we derive a revised equilibrium that is still characterized by strategic delay. Copyright Springer-Verlag Wien 2015

Keywords: Information cascade; Investment; Endogenous timing; D21; C72; L13 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:114:y:2015:i:1:p:63-74

DOI: 10.1007/s00712-014-0393-5

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