A War of Attrition with Experimenting Players

Chen, Chia-Hui; Ishida, Junichiro

A War of Attrition with Experimenting Players

Chen, Chia-Hui; Ishida, Junichiro

Institute of Social and Economic Research Discussion Papers, 2017, 1014, 1-47

Number of Access:421（2025-11-04 06:11 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/67805

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Title	A War of Attrition with Experimenting Players
Creator	NRID 1000020768238 1000020768238 CreatorName Chen, Chia-Hui
Creator	NRID 1000040324222 1000040324222 ORCID 0000-0002-0674-0216 0000-0002-0674-0216 researchmap permalink read0116302 read0116302 Scopus Author ID 36927932200 36927932200 CreatorName Ishida, Junichiro
Subject	war of attrition
	bandit problem
	experimentation
	standards competitions
	private learning
Abstract	A standard incomplete-information war of attrition is extended to incorporate experimentation and private learning. We obtain a characterization of all equilibria in this extended setup and use this setup to illuminate a tradeoff between short-run and long-run gains of experimentation. The extension yields qualitative impacts on the strategic nature of the problem. The option value of experimentation serves as a credible commitment device to stay in the game, which is instrumental in inducing the other player to concede earlier. As a direct consequence, there may be an equilibrium in which the strictly less efficient player can get the better end of the deal, implying that slow learning can be a blessing in this type of competition. Our analysis gives insight into why an apparently inferior technology often survives in many standards competitions and more broadly offers implications for technology adoption and industry dynamics. We also show that there is a non-degenerate set of parameters that can support the Pareto-efficient allocation as an equilibrium outcome whereas it is never possible in the standard setup.
Publisher	The Institute of Social and Economic Research, Osaka University
Source Title	Institute of Social and Economic Research Discussion Papers
Volume (Issue)	1014
Page	1-47
Date of Issued	2017-10
Language	English
Handle URL	https://hdl.handle.net/11094/67805
Relation.references	URI https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2017/DP1014.pdf
Access Rights	metadata only access
Category	ディスカッション／ワーキング・ペーパー DP/WP
Category	Institute of Social and Economic Research Discussion Papers

Resource Type	technical report
Local Type	DP/WP
DCMI Type	Text
DCTERMS.bibliographicCitation	Institute of Social and Economic Research Discussion Papers. 2017, 1014, p. 1-47
DC.title	A War of Attrition with Experimenting Players
DC.creator	Chen, Chia-Hui
DC.creator	Ishida, Junichiro
DC.publisher	The Institute of Social and Economic Research, Osaka University
DC.language' scheme='DCTERMS.RFC1766	English
DC.type' scheme='DCTERMS.DCMIType	Text
DCTERMS.issued' scheme='DCTERMS.W3CDTF	2017-10
DC.relation' scheme='DCTERMS.URI	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2017/DP1014.pdf
DC.subject	war of attrition
	bandit problem
	experimentation
	standards competitions
	private learning
DCTERMS.abstract	A standard incomplete-information war of attrition is extended to incorporate experimentation and private learning. We obtain a characterization of all equilibria in this extended setup and use this setup to illuminate a tradeoff between short-run and long-run gains of experimentation. The extension yields qualitative impacts on the strategic nature of the problem. The option value of experimentation serves as a credible commitment device to stay in the game, which is instrumental in inducing the other player to concede earlier. As a direct consequence, there may be an equilibrium in which the strictly less efficient player can get the better end of the deal, implying that slow learning can be a blessing in this type of competition. Our analysis gives insight into why an apparently inferior technology often survives in many standards competitions and more broadly offers implications for technology adoption and industry dynamics. We also show that there is a non-degenerate set of parameters that can support the Pareto-efficient allocation as an equilibrium outcome whereas it is never possible in the standard setup.
DC.format	67805
citation_title	A War of Attrition with Experimenting Players
citation_author	Chen, Chia-Hui
citation_author	Ishida, Junichiro
citation_publisher	The Institute of Social and Economic Research, Osaka University
citation_language	English
citation_date	2017-10
citation_journal_title	Institute of Social and Economic Research Discussion Papers
citation_volume	1014
citation_firstpage	1
citation_lastpage	47
citation_public_url	https://hdl.handle.net/11094/67805
citation_abstract_html_url	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2017/DP1014.pdf

A War of Attrition with Experimenting Players

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