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On Entry Deterrence and Imperfectly Observable Commitment

Research output: Working paperResearch

  • Anders Poulsen, Denmark
We analyse a simple entry-deterrence game, where a `Potential Intruder' only imperfectly observes the decision of an `Incumbent' to commit or to not commit to fight any entry by the Potential Intruder. Our game generalises the one studied in Bonanno (1992) by allowing for a richer information technology. We obtain, among other findings, the result that even though commitment is costly the Incumbent may strictly prefer to commit herself even when the Potential Intruder does not enter. Moreover, commitment can be a dominant strategy for the Incumbent, even when the Incumbent's decision is not observed perfectly by the Potential Intruder, unlike in Bonanno (1992). We also relate our results to the model in Bagwell (1995)
Original languageEnglish
Publication statusPublished - 2001

    Research areas

  • Game theory, Entry Deterrence, Commitment

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ID: 32302854