Endogenous timing of investments yields modified Stackelberg outcomes

A Cognitive Hierarchy Model of Behavior in Endogenous Timing Games∗

This paper applies the cognitive hierarchy model of Camerer, Ho and Chong (2004) to the action commitment game of Hamilton and Slutsky (1990). The model generates the heterogeneity of behavior reported in Huck, Müeller and Normann (2002). The model predicts the spike in the leadership quantity in the first period as well as the spike in the Cournot quantity in the second period. The model predi...

To Commit or Not to Commit: Endogenous Timing in Experimental Duopoly Markets

In this paper, we experimentally investigate the extended game with action commitment of Hamilton and Slutsky (1990). In their duopoly game, ...rms can choose their quantities in one of two periods before the market clears. If a ...rm commits to a quantity in period 1 it does not know whether the other ...rm also commits early. By waiting until period 2, a ...rm can observe the other ...rm’s pe...

Endogenous Timing in Pollution Control: Stackelberg versus Cournot-Nash Equilibria

Endogenous Timing and the Choice of Quality in a Vertically Di®erentiated Duopoly¤

The endogenous choice of timing is discussed in a vertically di®erentiated duopoly where quality improvement requires a ̄xed convex cost. The timing decision concerns the quality stage. Using an extended game with observable delay, it is shown that only simultaneous equilibria can arise. This puts into question the ability of Stackelberg games to describe the entry process. J.E.L. classi ̄cation...

Core Discussion Paper 2006/93 Endogenous Timing with Free Entry

A free entry model with linear costs is considered where firms first choose their entry time and then compete in the market according to the resulting timing decisions. Multiple equilibria arise allowing for infinitely many industry output configurations encompassing one limit-output dominant firm and the Cournot equilibrium with free entry as extreme cases. Sequential entry is never observed. ...