Endogenous timing in duopoly:: experimental evidence

In this paper we experimentally investigate Cournot duopolies with an extended timing game. The timing game has observable delay, that is, firms announce a production period (one out of two periods) and then they produce in the announced sequence. Theory predicts simultaneous production in the first period. With random matching we find that, given the actual experimental behavior in the subgames, subjects play a timing game more akin to a coordination game with two symmetric equilibria rather than the predicted game with a dominant strategy to produce early. As a result, a substantial proportion of subjects choose the second period.