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WAR OF ATTRITION: EVIDENCE FROM A LABORATORY EXPERIMENT ON MARKET EXIT
Author(s) -
OPREA RYAN,
WILSON BART J.,
ZILLANTE ARTHUR
Publication year - 2013
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12014
Subject(s) - attrition , economics , point (geometry) , set (abstract data type) , implementation , econometrics , microeconomics , computer science , mathematics , medicine , geometry , dentistry , programming language
We report an experiment designed to study whether inefficient firms are systematically driven from overcrowded markets. Our data set includes a series of 3,800 wars of attrition of a type modeled by Fudenberg and Tirole in 1986. We find that exit tends to be efficient and exit times conform surprisingly well to point predictions of the model. Moreover, subjects respond similarly to implementations framed in terms of losses as they do to those framed in terms of gains. ( JEL D21, L11, C92)