Endogenous timing in duopoly: experimental evidence

Abstract

In this paper we experimentally investigate the extended game with observable delay of Hamilton and Slutsky (Games Econ. Beh., 1990). Firms bindingly announce a production period (one out of two periods) and then they produce in the announced sequence. Theory predicts simultaneous production in period one but we …nd that a substantial proportion of subjects choose the second period.

Do people make strategic commitments? Experimental evidence on strategic information avoidance

“…It is instructive to compare our findings with those from Fonseca et al (2006). In their two-period duopoly quantity-setting game with observable delay (Hamilton and Slutsky 1990) the unique equilibrium is that both players produce in period 1; in fact, moving in period 1 is a dominant strategy.…”

“…Our paper is also related to the literature on games with endogenous moves ('timing games'). See for example Datta Mago and Dechenaux (2009) and Fonseca et al (2005Fonseca et al ( , 2006. In these (mostly duopoly) games, the order of moves is endogenous.…”

“…Fischer et al (2006) consider the case where a second mover is with a certain probability informed about the first mover's action. Fonseca et al (2006) consider the choice of when to move (endogenous timing), and hence how much information to possess, in a duopoly game. Studying the ultimatum game Poulsen and Tan (2007) consider the decision of Proposers whether or not to learn the Responders' smallest acceptable offers.…”

Re-matching, information and sequencing effects in posted offer markets

“…1 Technological developments drive still other procedural variations. In particular, an increasing number of oligopoly experiments re-match participants into new markets after each trading period (e.g., Cason and Datta 2006;Cox and Walker 1998;Datta and Dechenaux 2006;Davis et al 2003;Dufwenberg and Gneezy 2000;Fonseca et al 2006;Holt 1985;Huck et al 2001;Martin et al 2001;Normann 2006;Orzen 2006;and Snyder et al 2006). In large part, the decreased costs of implementing such procedures drive their increased use.…”

Profit-Sharing and the Endogenous Order of Moves in Oligopoly

“…There are four possible combinations of orders of 4 Base upon actual experiments, Fonseca, Müller and Normann [10] develop an insightful discussion on the applicability and validity of observable delay games in duopoly. 5 In contrast, the seminal work by Hamilton and Slutsky [9] shows that a firm has an incentive to be a follower in a differentiated duopoly.…”