Antitrust & Competition Policy Blog

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Monday, September 30, 2013

Decision time and steps of reasoning in a competitive market entry game

Florian Lindner, University of Innsbruck addresses Decision time and steps of reasoning in a competitive market entry game.

ABSTRACT: Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects' risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions: (i) the level of strategic sophistication, which has a positive impact on entry decisions, and (ii) the impact of time pressure, which has a (partly) negative influence on entry rates. Furthermore, when ranks are determined using a real effort task, differences in entry rates are explainable by higher competitiveness of males. Additionally, I show that individual characteristics are more important for the entry decision in more competitive environments.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/09/decision-time-and-steps-of-reasoning-in-a-competitive-market-entry-game-.html

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