Competing for market shares: Does the order of moves matter even when it shouldn’t?

B-Tier
Journal: Journal of Economic Behavior and Organization
Year: 2019
Volume: 166
Issue: C
Pages: 346-365

Authors (3)

Hörtnagl, Tanja (not in RePEc) Kerschbamer, Rudolf (Leopold-Franzens-Universität I...) Stracke, Rudi (not in RePEc)

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

This paper investigates whether the order of moves affects behavior and outcomes even in the absence of material incentives for pre-commitment. Evidence from laboratory experiments with shared rents, symmetric players and either a simultaneous or a sequential move order suggests that it is an inherent advantage to move second rather than first. The reason is that first movers face strategic uncertainty, while second movers have the power to ultimately determine the outcome through their investment choices. Many first movers acknowledge this power and decrease investments below the standard prediction which is interpreted as an attempt to collude. This strategy leads to higher absolute payoffs for the first-movers compared to a situation where they do not try to establish collusion. However, relative payoffs are low since collusive outcomes are typically asymmetric to the advantage of the second mover.

Technical Details

RePEc Handle
repec:eee:jeborg:v:166:y:2019:i:c:p:346-365
Journal Field
Theory
Author Count
3
Added to Database
2026-01-25