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

Aleksei Chernulich, John Horowitz, Jean Paul Rabanal (), Olga A Rud () and Manizha Sharifova
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Olga A Rud: University of Stavanger, Postal: University of Stavanger, NO-4036 Stavanger, Norway

No 2021/3, UiS Working Papers in Economics and Finance from University of Stavanger

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 outside option 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 pro- vision; forecasting (search for similar items in EconPapers)
JEL-codes: C91 D81 D83 D84 G11 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2021-09-29
New Economics Papers: this item is included in nep-exp, nep-gth and nep-ore
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