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Search, Project Adoption and the Fear of Commitment

Abstract : We examine project adoption decisions of firms constrained in the number of projects they can handle at once. Adoption requires a commitment for a period of uncertain duration, restricting the firm in subsequent periods. Capacity constraints create a “fear of commitment” — some positive return projects are not adopted. In the sequential move dynamic game, the second mover sometimes adopts projects that were rejected by the first, even when both firms are symmetric and equally informed. We study the e§ects of competition on the fear of commitment, and compare the jointly optimal adoption decision to the behavior of strategic non-cooperative firms.
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Preprints, Working Papers, ...
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Submitted on : Wednesday, March 16, 2022 - 2:28:36 PM
Last modification on : Friday, April 8, 2022 - 3:46:06 PM


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Vidya Atal, Talia Bar, Sidartha Gordon. Search, Project Adoption and the Fear of Commitment. 2013. ⟨hal-03610537⟩



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