Seminar

Observation delays and cycles

Lucie Menager (LEMMA, Université Paris II)

October 10, 2017, 11:00–12:30

Toulouse

Room MS 001

Economic Theory Seminar

Abstract

We study a dynamic team problem in which N players contribute to a common project whose duration is uncertain. The probability that the project is successful increases with the level of effort exerted by each player, and individual efforts are unobserved. We assume that players are informed of the success or failure of their partners after a time lag. This delay is interpreted as a technological constraint on information transmission. Regardless of the length of the delay, there is a unique symmetric equilibrium in which players alternate maximal and minimal effort. The symmetric equilibrium payoff follows a regular cyclical pattern and oscillates around the symmetric equilibrium payoff without delay. We characterize several asymmetric equilibria, and show that the unicity of the symmetric equilibrium does not hold without the assumption of a first date. Joint with Sid Gordon (Paris-Dauphine) and Chantal Marlats (Université Paris 2)