Rushes in Large Timing Games. Issue 3 (7th June 2017)

• Record Type: Journal Article
• Authors: Anderson, Axel; Smith, Lones; Park, Andreas
• Is Part Of: Econometrica. Volume 85:Issue 3(2017:May)
• Page Start: 871
• Page End: 913
• Publication Date: 2017-06-07
• Subjects: Timing games -- war of attrition -- pre‐emption game -- tipping -- bubbles -- sorority rushes -- bank runs -- population games; Econometrics -- Periodicals; Economics, Mathematical -- Periodicals; Economics -- Periodicals; Économétrie -- Périodiques; Mathématiques économiques -- Périodiques; Économie politique -- Périodiques; 330.05
• DOI: 10.3982/ECTA13089
• Languages: English
• ISSNs: 0012-9682

Abstract

Abstract : We develop a continuum player timing game that subsumes standard wars of attrition and pre‐emption games, and introduces a new rushes phenomenon. Payoffs are continuous and single‐peaked functions of the stopping time and stopping quantile. We show that if payoffs are hump‐shaped in the quantile, then a sudden "rush" of players stops in any Nash or subgame perfect equilibrium. Fear relaxes the first mover advantage in pre‐emption games, asking that the least quantile beat the average; greed relaxes the last mover advantage in wars of attrition, asking just that the last quantile payoff exceed the average. With greed, play is inefficiently late: an accelerating war of attrition starting at optimal time, followed by a rush. With fear, play is inefficiently early: a slowing pre‐emption game, ending at the optimal time, preceded by a rush. The theory predicts the length, duration, and intensity of stopping, and the size and timing of rushes, and offers insights for many common timing games.