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Making Sense of the Experimental Evidence on Endogenous Timing in Duopoly Markets

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Santos-Pinto, Luís

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Abstract The prediction of asymmetric equilibria with Stackelberg outcomes is clearly the most frequent result in the endogenous timing literature. Several experiments have tried to validate this prediction empirically, but failed to find support for it. In contrast, these experiments find that simultaneous-move outcomes are modal and that behavior in endogenous timing games is quite heterogeneous. This paper generalizes Hamilton and Slutsky's (Hamilton, J., Slutsky, S., 1990. Endogenous timing in duopoly games: Stackelberg or Cournot equilibria. Games and Economic Behavior 2, 29–46) endogenous timing games by assuming that players are averse to inequality in payoffs. I explore the theoretical implications of inequity aversion and compare them to the empirical evidence. I find that this explanation is able to organize most of the experimental evidence on endogenous timing games. However, inequity aversion is not able to explain delay in Hamilton and Slutsky’s endogenous timing games.
Classification Basic Research, General Concepts and History of Economics
Free Keywords Endogenous timing; Cournot; Stackelberg; Inequity aversion; C72; D43; D63; L13
Document language English
Publication Year 2008
Page/Pages p. 657-666
Journal Journal of Economic Behavior & Organization, 68 (2008) 3-4
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)