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Review of Economic Design

, Volume 16, Issue 2–3, pp 251–268 | Cite as

An experiment of social learning with endogenous timing

  • Boğaçhan ÇelenEmail author
  • Kyle Hyndman
Original Paper

Abstract

In this paper, we experimentally investigate a social learning model with endogenous timing. Specifically, we focus on a model, in which two subjects are supposed to make a binary decision. One alternative is a safe action with a fixed payoff, while the other alternative is a risky action. The subjects can make their decisions in three stages. The safe action is reversible, but the risky action is not. A subject who delays his decision can observe the decision of the other subject in the earlier stages, and as a result, acquire more information. We show that players do delay their decisions in order to obtain more information. Furthermore, they delay especially when their private information does not particularly support the risky action. We also find evidence which suggests that risk aversion plays an important role in timing decisions, often leading to ex post inefficient outcomes.

Keywords

Delay Information Experiment 

JEL Classification

C72 C91 D82 D83 

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Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.Graduate School of BusinessColumbia UniversityNew YorkUSA
  2. 2.Department of Economics, (AE1)Maastricht UniversityMaastrichtThe Netherlands

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