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We report an experiment designed to study whether ine cient rms are systematically driven from overcrowded markets. Our data set includes series of 3800 wars of attrition of a type modeled in Fudenberg and Tirole (1986). We nd that exit tends to be e cient 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.


Working Paper 08-02



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