On Games of Strategic Experimentation

38 Pages Posted: 25 Oct 2013 Last revised: 6 Nov 2013

See all articles by Dinah Rosenberg

Dinah Rosenberg

HEC Paris - Economics & Decision Sciences

Antoine Salomon

Université Paris XIII Nord

Nicolas Vieille

HEC Paris - Economics & Decision Sciences

Date Written: October 24, 2013

Abstract

We study a class of symmetric strategic experimentation games. Each of two players faces a (exponential) two-armed bandit problem, and must decide when to stop experimenting with the risky arm. The equilibrium amount of experimentation depends on the degree to which experimentation outcomes are observed, and on the correlation between the two individual bandit problems. When experimentation outcomes are public, the game is basically one of strategic complementarities. When experimentation decisions are public, but outcomes are private, the strategic interaction is more complex. We fully characterize the equilibrium behavior in both informational setups, leading to a clear comparison between the two. In particular, equilibrium payoffs are higher when equilibrium outcomes are public.

Keywords: strategic experimentation, bandit, experimentation

Suggested Citation

Rosenberg, Dinah and Salomon, Antoine and Vieille, Nicolas, On Games of Strategic Experimentation (October 24, 2013). Games and Economic Behavior, Vol. 82, No. November, 2013; HEC Paris Research Paper No. ECO/SCD-2013-1008. Available at SSRN: https://ssrn.com/abstract=2344788

Dinah Rosenberg

HEC Paris - Economics & Decision Sciences ( email )

Paris
France

Antoine Salomon

Université Paris XIII Nord ( email )

Avenue Jean Baptiste Clement
Villetaneuse, Seine Saint Denis 93430
France

Nicolas Vieille (Contact Author)

HEC Paris - Economics & Decision Sciences ( email )

Paris
France

Register to save articles to
your library

Register

Paper statistics

Downloads
104
Abstract Views
1,460
rank
254,939
PlumX Metrics