Moscarini, Giuseppe; Squintani, Francesco - In: Journal of Economic Theory 145 (2010) 2, pp. 639-660
We study a winner-take-all R&D race between two firms that are privately informed about the arrival rate of an invention. Over time, each firm only observes whether the opponent left the race or not. The equilibrium displays a strong herding effect, that we call a 'survivor's curse.' Unlike in...