Entry and exit decisions under public and private information: an experiment

Chernulich, Aleksei; Horowitz, John; Rabanal, Jean Paul; Rud, Olga; Sharifova, Manizha

Abstract

We design an experiment to study how reversible entry decisions are affected by public and private payoff disclosure policies. In our environment, subjects choose between a risky payoff, which evolves according to an autoregressive process, and a constant payoff. The treatments vary the information disclosure rule on the risky payoff, such that in the public information treatment the risky payoff is always observable, while in the private information treatment, the risky payoff is observable only to the participants who enter the market. We find that under private information, market entry is higher, which suggests that subjects engage in exploration and place value on information.

Citation

Chernulich, A., Horowitz, J., Rabanal, J. P., Rud, O., & Sharifova, M. (2023). Entry and exit decisions under public and private information: an experiment. Experimental Economics, 26(2), 339-356. https://doi.org/10.1007/s10683-022-09764-9

• Journal Article Type: Article
• Acceptance Date: Jun 12, 2023
• Online Publication Date: Jul 11, 2022
• Publication Date: 2023-04
• Deposit Date: Nov 7, 2023
• Journal: Experimental Economics
• Print ISSN: 1386-4157
• Electronic ISSN: 1573-6938
• Publisher: Springer
• Peer Reviewed: Peer Reviewed
• Volume: 26
• Issue: 2
• Pages: 339-356
• DOI: https://doi.org/10.1007/s10683-022-09764-9
• Public URL: https://durham-repository.worktribe.com/output/1899456