On Games of Strategic Experimentation

Dinah Rosenberg, Antoine Salomon () and Nicolas Vieille ()

No 1008, HEC Research Papers Series from HEC Paris

Abstract: We study a class of symmetric strategic experimentation games. Each of two players faces a (exponential) two-armed bandit problem, and must decide when to stop experimenting with the risky arm. The equilibrium amount of experimentation depends on the degree to which experimentation outcomes are observed, and on the correlation between the two individual bandit problems. When experimentation outcomes are public, the game is basically one of strategic complementarities. When experimentation decisions are public, but outcomes are private, the strategic interaction is more complex. We fully characterize the equilibrium behavior in both informational setups, leading to a clear comparison between the two. In particular, equilibrium payoffs are higher when equilibrium outcomes are public.

Keywords: symmetric strategic experimentation games; equilibrium; strategic experimentation (search for similar items in EconPapers)
JEL-codes: C00 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-10-24
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: On games of strategic experimentation (2013)
Working Paper: On Games of Strategic Experimentation (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1008

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