z-logo
open-access-imgOpen Access
Who goes first? Strategic delay under information asymmetry
Author(s) -
Wagner Peter A.
Publication year - 2018
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te2171
Subject(s) - information asymmetry , economics , microeconomics , information structure , investment (military) , complete information , global game , actuarial science , linguistics , philosophy , politics , political science , law
This paper considers a timing game in which heterogeneously informed agents have the option to delay an investment strategically to learn about its uncertain return from the experience of others. I study the effects of information exchange through strategic delay on long‐run beliefs and outcomes. Investment decisions are delayed when the information structure prohibits informational cascades. When there is only moderate inequality in the distribution of information, equilibrium beliefs converge in the long run, and there is an insufficient aggregate investment relative to the efficient benchmark. When the distribution of information is more skewed, there can be a persistent wedge in posterior beliefs between well and poorly informed agents, because the poorly informed tend to “drive out” the well informed.

The content you want is available to Zendy users.

Already have an account? Click here to sign in.
Having issues? You can contact us here