Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79962
Authors: 
Artinger, Sabrina
Year of Publication: 
2013
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Behavioral Economics, Underlying Principles D05-V3
Abstract: 
How does demand uncertainty affect entry into skill-based competition? I investigate this question in a market entry experiment with skill-based payoffs by systematically varying two key elements of the market environment: demand risk and expected market size. Results show that people's reactions to demand risk depend on the market size: in small markets people enter more when demand is risky, in large markets they enter less when demand is risky. This leads to substantial inefficiencies in both cases: demand risk significantly amplifies overentry in small markets and underentry in large markets. Skill and confidence have strong main effects but do not moderate reactions to demand risk or market size. This result has important implications for market design and regulation.
JEL: 
D03
D80
D23
Document Type: 
Conference Paper

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