Strategic Experimentation with Congestion
| Autor: | Caroline Thomas |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
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Strategic options 05 social sciences Stochastic game Bayesian inference Multi-armed bandit Microeconomics Competition (economics) 0502 economics and business Value (economics) Economics Business 050207 economics General Economics Econometrics and Finance Externality 050205 econometrics |
| Zdroj: | American Economic Journal: Microeconomics. 13:1-82 |
| ISSN: | 1945-7685 1945-7669 |
| DOI: | 10.1257/mic.20170187 |
| Popis: | This paper considers a two-player game of strategic experimentation with competition. Each agent faces a two-armed bandit problem where she continually chooses between her private, risky arm and a common, safe arm. Each agent has exclusive access to her private arm. However, the common arm can only be activated by one agent at a time. This congestion creates negative payoff externalities. Our main finding is that congestion gives rise to new strategic considerations: players perceive a strategic option value from occupying the common arm, making it more attractive than in the absence of competition or when switching is irreversible. (JEL C72, C73, D62, D83) |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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