Should I Stay or should I Go? Bandwagons in the lab

B-Tier
Journal: Journal of Economic Behavior and Organization
Year: 2018
Volume: 150
Issue: C
Pages: 86-97

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We experimentally investigate the impact of strategic uncertainty and complementarity on leader and follower behavior using the model of Farrell and Saloner (1985). At the core of the model are endogenous timing, irreversible actions and private valuations. We find that strategic complementarity strongly determines follower behavior. Once a subject decides to abandon the status quo the probability that other players jump on the bandwagon increases sharply. However, there is a reluctance to lead when leading is a conditional best response. We explain this deviation from the neo-classical equilibrium by injecting some noise in the equilibrium concept. We also find that cheap talk improves efficiency.

Technical Details

RePEc Handle
repec:eee:jeborg:v:150:y:2018:i:c:p:86-97
Journal Field
Theory
Author Count
3
Added to Database
2026-01-25