Excess entry in an experimental winner-take-all market
“Winner-take-all” markets (i.e., markets in which the relative and not the absolute performance is decisive) have gained in importance. Such markets have a tendency to provoke inefficiently many entries. We investigate such markets in an experiment and show that there are even more inefficient entri...
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| Veröffentlicht in: | Journal of economic behavior & organization 2008-07, Vol.67 (1), p.150-163 |
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| container_title | Journal of economic behavior & organization |
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| creator | Fischbacher, Urs Thöni, Christian |
| description | “Winner-take-all” markets (i.e., markets in which the relative and not the absolute performance is decisive) have gained in importance. Such markets have a tendency to provoke inefficiently many entries. We investigate such markets in an experiment and show that there are even more inefficient entries than predicted by the Nash equilibrium. Moreover, this effect increases with group size. Quantal response equilibrium predicts the increase in group size but fails to predict the excess entry in the smaller group. We show that the excess entry is not caused by coordination failures. Furthermore, individual entry behavior is not significantly linked to risk preferences. |
| doi_str_mv | 10.1016/j.jebo.2006.05.018 |
| format | Article |
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| subjects | Coordination Equilibrium models Excess entry Experiment Experimental economics Game theory Group size Market entry Market theory Risk Risk preferences Studies Winner-take-all market |
| title | Excess entry in an experimental winner-take-all market |
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