 Timing Games: Theory and ApplicationsTiming-Spiele: Theorie und AnwendungenEugen Kováč and Robert Schmidt EconStor Research Reports from ZBW - Leibniz Information Centre for Economics Abstract: The timing of actions is ubiquitous in economic decision-making. This research project aimed to improve our understanding of the timing of actions across various economic environments. We introduced a novel framework of strategic interaction in continuous time, where players choose both an action as well as its timing. Departing from much of the existing literature, which either imposes a certain sequence of actions or focuses on timing games with trivial action sets, our results offer new insights in the interaction of action choices and their timing. Apart from providing a greater level of realism, we developed new methods for the analysis of timing games. This addresses short-comings of existing frameworks, including finite action sets or difficulties with accommodating both impatience and sequential actions. Our results establish a close connection between continuous time games with infinite action sets and related games played on discrete time grids, generalizing well-known results of Si-mon and Stinchcombe (1989). Our methodology combines rigor with a wide range of applica-tions, including price competition games. In some cases, we find similar results as authors who used other setups (e.g., two-period settings) to endogenize the order of moves. In other cases, our results differ markedly. We find that the stronger firm often leads, but the possibility to deter entry may reverse the order of moves. Our methodology allows us to analyze games in continuous time that were previously not con-sidered as dynamic. We embedded electoral competition in our framework, thus opening up a novel aspect of strategic interaction also here. The order of candidates' policy announcements becomes an integral part of their strategic interaction. We find that candidates who differ in their valences or in their competence never choose to announce their platforms simultaneous-ly when they are free to decide when to make their choices. Imposing an order of moves can thus be restrictive. Using our methodology, we endogenized the order of candidates' moves, along with their policy platforms. We also analyzed patent races as timing games, focusing on the trade-off between keeping an innovation secret or revealing it to a rival. Such disclosures may be purely informational or involve patenting. In one study, we identify how private information about research progress influences disclosure strategies. We find that firms reveal breakthroughs primarily to discour-age rivals when research is difficult, but keep them secret when rapid innovation is expected. A second study evaluates how the choice between patenting and secrecy depends on the market structure. In markets with complementary products, firms benefit from patenting to facil-itate coordination and patent pools, whereas in markets with substitutes, secrecy serves as a strategic tool to prevent competition. Overall, our results indicate that firms have greater incen-tives to patent when they are impatient and when technological spillovers are low. Last but not least, we brought our continuous-time analysis to the lab and confirmed some of our theoretical predictions. We used state-of-the art experimental methods (e.g., the "freeze time protocol" of Calford and Oprea 2017), and expanded these to include non-trivial action choices of the players. Specifically, we analyzed a variant of Matching Pennies in continuous time with an endogenous order of players' action choices. Keywords: continuous-time game; timing; second-mover advantage; electoral competition; price competition; R&D; patent race; information revelation; matching pennies; coordination (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zbw:esrepo:341725 Access Statistics for this paper More papers in EconStor Research Reports from ZBW - Leibniz Information Centre for Economics Contact information at EDIRC. |
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