Mason, Charles F., and Phillips, Owen R.

"An Experimental Evaluation of Strategic Preemption"

JEL codes: C91, C92, L12, L13
Keywords: raising rivals' costs, experiments, subgame perfection

Abstract:  This paper reports the results of a series of two-stage, two-person noncooperative games where one player can strategically preempt the other. In one of our designs, the subgame perfect equilibrium entails complete preemption; in the other, it entails partial preemption. The data show that players tend to completely preempt when it is privately optimal. However, when partial preemption is privately optimal, a non-trivial fraction of players persist in choosing the non-preemptive structure. This may result because of occasional irrational behavior following preemptive play, which induces some dominant agents to play less agressively.

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