Clock games: Theory and experiments

doi:10.1016/j.geb.2009.09.005

Games and Economic Behavior

Volume 68, Issue 2, March 2010, Pages 532-550

https://doi.org/10.1016/j.geb.2009.09.005 Get rights and content

Abstract

In many situations, timing is crucial—individuals face a trade-off between gains from waiting versus the risk of being preempted. To examine this, we offer a model of clock games, which we then test experimentally. Each player's clock starts upon receiving a signal about a payoff-relevant state variable. Since the timing of the signals is random, clocks are de-synchronized. A player must decide how long, if at all, to delay his move after receiving the signal. We show that (i) delay decreases as clocks become more synchronized, and (ii) when moves are observable, players “herd” immediately after any player makes a move. Our experimental results are broadly consistent with these two key predictions of the theory.

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^☆: We thank Dilip Abreu, José Scheinkman and especially Thorsten Hens for helpful comments. Wiola Dziuda, Peter Lin, Jack Tang, and Jialin Yu deserve special mention for excellent research assistance. We also benefited from seminar participants at the University of Pittsburg, the Institute of Advanced Studies at Princeton, the UC Santa Cruz, the University of Michigan, UC Berkeley, and UCLA as well as from conference presentation at Princeton's PLESS Conference on Experimental Economics. The authors acknowledge financial support from the National Science Foundation. The first author thanks the Alfred P. Sloan Foundation for financial support while the second author thanks Trinity College, Cambridge, for their generous hospitality.

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Clock games: Theory and experiments☆

Abstract

J. Finan. Econ.

Math. Social Sci.

Europ. Econ. Rev.

J. Econ. Theory

J. Econ. Theory

Bubbles and crashes

Econometrica

Rigging the lobbying process: An application of the all-pay auction

Amer. Econ. Rev.

Continuous time repeated games

Int. Econ. Rev.

The generalized war of attrition

Amer. Econ. Rev.

Global games and equilibrium selection

Econometrica

Information revelation and strategic delay in a model of investment

Econometrica

A theory of exit in duopoly

Econometrica

Game Theory

Endogenous timing and the clustering of agents' decisions

J. Polit. Econ.

Perfect equilibrium in a model of a race

Rev. Econ. Stud.