Endogenous timing game with non-monotonic reaction functions

Abstract : The aim of this paper is to generalize the endogenous timing game proposed by Hamilton and Slutsky (1990) to cases where the reaction functions are non-motononic, as for instance in the literature on contest. Following the taxonomy of social dilemma provided by Eaton (2004) we consider several pos- sible situations depending on the nature of interactions (plain complementarity or plain substituability and strategic complementarity or strategic substitutability). Under the assumptions of the existence and the uniqueness of the Nash and Stackelberg equilibria, we highlight the presence of a first-mover advantage or a second-mover incentive only depending on the nature of cross-effects in players' payoff functions and the slopes of their reaction functions at the Nash equilibrium of the static game. These properties allow us to determine rigorously the Subgame Perfect Nash Equilibrium (SPNE) in the ten studied situations. We establish under which conditions on the nature of interactions a leader emerges at the SPNE
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Submitted on : Thursday, January 6, 2011 - 3:42:00 PM
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Grégoire Rota-Graziosi, Magnus Hoffmann. Endogenous timing game with non-monotonic reaction functions. 2011. ⟨halshs-00553130⟩



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