TY - JOUR
T1 - Clock games
T2 - Theory and experiments
AU - Brunnermeier, Markus K.
AU - Morgan, John
N1 - Funding Information: ✩ 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. * Corresponding author. E-mail addresses: [email protected] (M.K. Brunnermeier), [email protected] (J. Morgan). URLs: http://www.princeton.edu/~markus (M.K. Brunnermeier), http://faculty.haas.berkeley.edu/rjmorgan/ (J. Morgan).
PY - 2010/3
Y1 - 2010/3
N2 - 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.
AB - 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.
KW - Bubbles
KW - Clock games
KW - Currency attacks
KW - Experiments
KW - Political revolution
UR - http://www.scopus.com/inward/record.url?scp=75349084744&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=75349084744&partnerID=8YFLogxK
U2 - 10.1016/j.geb.2009.09.005
DO - 10.1016/j.geb.2009.09.005
M3 - Article
SN - 0899-8256
VL - 68
SP - 532
EP - 550
JO - Games and Economic Behavior
JF - Games and Economic Behavior
IS - 2
ER -