Market Exit and Minimax Regret

This paper shows how minimax regret sheds new light on an old economic topic, market-exit games. It focuses wars of attrition, namely overcrowded duopoly markets where the strategic variable is exit time. The only symmetric Nash equilibrium (NE) game studied a mixed-strategy that leads to null expected payoff, i.e., payoff firm gets when it immediately exits market. result not convincing, both from behavioral and viewpoint. approach builds upon opposite regrets — exiting market too late early more convincing ensures firms obtain strictly positive payoff. Highlights Minimax behavior optimal exit-times in markets. provides content mixed strategies. In duopolies, if firms’ aim consists minimizing regrets, then they get better payoffs than NE.