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Düsseldorf Institute for Competition Economics (DICE), University of Düsseldorf >
DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE) >
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http://hdl.handle.net/10419/50734
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| Title: | | Technology adoption in markets with network effects: Theory and experimental evidence  |
| Authors: | | Keser, Claudia Suleymanova, Irina Wey, Christian |
| Issue Date: | | 2011 |
| Series/Report no.: | | DICE discussion paper 33 |
| Abstract: | | We examine a technology adoption game with network effects in which coordination on technology A and technology B constitute a Nash equilibrium. Coordination on technology B is assumed to be payoff-dominant. We define a technology's critical mass as the minimum share of users necessary to make the choice of this technology a best response for any remaining user. We show that the technology with a lower critical mass is risk-dominant and is chosen by the maximin criterion. We present experimental evidence that both pay-off dominance and risk dominance explain participants' choices. The relative riskiness of a technology can be proxied using technologies' critical masses or stand-alone values. |
| Subjects: | | Network Effects Critical Mass Coordination Riskiness |
| JEL: | | C72 C91 D81 |
| Document Type: | | Working Paper |
| Appears in Collections: | | DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE)
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