Date Added: Sep 2010
The authors study experimentally how entry into a market with uncertain capacity is affected by the type of information potential entrants has available. The focus is on behavior in a two-market entry game. In the risky information market there are two possible market capacities, both known to occur with probability 1/2. In the ambiguous information market the two possible market capacities effectively occur with probability 1/2 but participants are only told that there is uncertainty about capacities. They find that average entry is higher under ambiguous information than under risky information. To control for comparison effects and the effects of strategic interaction in the twomarket environment they also study a two-lottery individual decision problem and onemarket entry games with ambiguous and risky information.