If
first movers anticipate that second movers are more likely to complete trades where the price favors the second mover, then
first movers find themselves in a situation similar to a first price auction; one could ask for a larger but less likely payoff or one that is smaller and more likely.
7) Figures in the middle column reveal little difference among average amounts sent by
first movers in all four implementations of the investment game.
Second movers should return exactly what was sent (Y/X = 1), and
first movers should anticipate this (E[Y/X] = i).
Customers, suppliers and competitors that are pursuing first-mover advantages will seek out other
first movers with whom to partner.
If the large party is placed either second or fourth in the order, condition 3 is satisfied, and the rest of the argument above leading to proportional sharing among the
first movers applies.
A similar but not identical timing advantage denied to
first movers but available to followers is lower research and development costs.
Figure 1a presents the time series of the average transfers to different income groups from Type A (rich)
first movers from rounds 1 to 10 in the investment game.
The self-regarding preferences model predicts that second movers will keep all of the tripled amounts sent, and knowing this,
first movers will send nothing.
This behavior is an indication either that
first movers want to give more money to attractive counterparts (taste-based discrimination) or that they expect attractive persons to reject lower offers (which is not taste based but rather based on expectations or, in a way, productivity).
