War of Attrition: Evidence from a Laboratory Experiment on Market Exit

We report an experiment designed to study whether inecient rms are systematically driven from overcrowded markets. We implement a series of 3800 wars of attrition of a type modeled in Fudenberg and Tirole (1986). Exit tends to be ecient and exit times conform reasonably well to point predictions of the model. Moreover, we nd that subjects respond similarly to implementations framed in terms of losses as they do to those framed in terms of gains.

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Year of publication:	2008
Authors:	Oprea, RYan ; Wilson, Bart J. ; Zillante, Artie
Institutions:	Economic Science Institute (ESI), Argyros School of Business and Economics
Subject:	Market exit \| war of attrition \| experimental economics

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Extent:	application/pdf
Series:	Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	27 pages
Classification:	D21 - Firm Behavior ; L11 - Production, Pricing, and Market Structure Size; Size Distribution of Firms ; C92 - Laboratory; Group Behavior
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008527024