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Learning to Disagree in a Game of Experimentation

Alessandro Bonatti () and Johannes Hörner

No 17-791, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We analyze strategic experimentation in which information arrives through fully revealing, publicly observable “breakdowns.” When actions are hidden, there exists a unique symmetric equilibrium that involves randomization over stopping times. With two players, this is the unique equilibrium. Randomization leads to dispersion in actions and to belief disagreement on the equilibrium path. The resulting lack of coordination has significant welfare consequences. In contrast, when actions are observable, the equilibrium is pure and welfare improves.

Keywords: Experimentation; free-riding; mixed strategies; monitoring; delay (search for similar items in EconPapers)
JEL-codes: C73 D83 O33 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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Journal Article: Learning to disagree in a game of experimentation (2017) Downloads
Working Paper: Learning to Disagree in a Game of Experimentation (2015) Downloads
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