TY - JOUR
T1 - Making sense of the experimental evidence on endogenous timing in duopoly markets
AU - dos Santos Pinto, Luís Pedro
PY - 2008/12
Y1 - 2008/12
N2 - 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.
AB - 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.
KW - Cournot
KW - Endogenous timing
KW - Inequity aversion
KW - Stackelberg
UR - http://www.scopus.com/inward/record.url?scp=56249142281&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2008.06.005
DO - 10.1016/j.jebo.2008.06.005
M3 - Article
AN - SCOPUS:56249142281
SN - 0167-2681
VL - 68
SP - 657
EP - 666
JO - Journal Of Economic Behavior & Organization
JF - Journal Of Economic Behavior & Organization
IS - 3-4
ER -