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Informational externalities with lump‐sum sampling

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  • Carole Haritchabalet
  • Régis Renault

Abstract

We consider a game of strategic experimentation where agents are restricted to an all‐or‐nothing sampling strategy. The strategic interaction between agents due to informational externalities is affected by the sizes of the experimentation samples and the sensitivity of information to changes in sample sizes. There is experimentation only if the overall sample is large enough. Equilibrium may involve optimal, insufficient or excessive experimentation relative to a second‐best welfare benchmark. This unusual over‐experimentation result is associated not necessarily with large samples but with a low elasticity of the value of information with respect to the sample size. Nous étudions un problème d'expérimentation stratégique dans lequel les agents sont contraints par une stratégie d'expérimentation du type ‘tout ou rien.’ L'interaction stratégique entre les agents est affectée par la taille de l'échantillon sur lequel on expérimente et la sensibilité de l'information dans les changements de cette taille. Il y a expérimentation seulement si l'échantillon total est suffisamment grand. L'expérimentation peut être optimale, insuffisante ou excessive en comparaison avec un optimum social de second rang. Ce résultat inhabituel d'expérimentation excessive n'est pas forcément associéà un échantillon grand mais à une faible élasticité de la valeur de l'information par rapport à la taille de l'échantillon.

Suggested Citation

  • Carole Haritchabalet & Régis Renault, 2006. "Informational externalities with lump‐sum sampling," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(3), pages 1005-1022, August.
    • Handle: RePEc:wly:canjec:v:39:y:2006:i:3:p:1005-1022
    DOI: 10.1111/j.1540-5982.2006.00379.x
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