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Decision time and steps of reasoning in a competitive market entry game

By  |  September 30, 2013

Posted by D. Daniel Sokol

Florian Lindner, University of Innsbruck addresses Decision time and steps of reasoning in a competitive market entry game

ABSTRACT: Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects’ risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions: (i) the level of strategic sophistication, which has a positive impact on entry decisions, and (ii) the impact of time pressure, which has a (partly) negative influence on entry rates. Furthermore, when ranks are determined using a real effort task, differences in entry rates are explainable by higher competitiveness of males. Additionally, I show that individual characteristics are more important for the entry decision in more competitive environments.