Who goes first? Strategic delay under information asymmetry

Abstract

This paper considers a timing game in which heterogeneously informed agents have the option to delay an investment strategically to learn about its uncertain return from the experience of others. I study the effects of information exchange through strategic delay on long‐run beliefs and outcomes. Investment decisions are delayed when the information structure prohibits informational cascades. When there is only moderate inequality in the distribution of information, equilibrium beliefs converge in the long run, and there is an insufficient aggregate investment relative to the efficient benchmark.