Title

War of Attrition: Evidence from a Laboratory Experiment on Market Exit

Document Type

Article

Publication Date

10-2013

Abstract

We report an experiment designed to study whether inefficient firms are systematically driven from overcrowded markets. Our data set includes a series of 3,800 wars of attrition of a type modeled by Fudenberg and Tirole in 1986. We find that exit tends to be efficient and exit times conform surprisingly well to point predictions of the model. Moreover, subjects respond similarly to implementations framed in terms of losses as they do to those framed in terms of gains.

Comments

This article was originally published in Economic Inquiry, volume 51, issue 4, in 2013.

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Peer Reviewed

1

Copyright

Wiley