Market Entry Decisions In An Experimental Game Setting

Combining perspectives from population ecology and strategy research, this paper examines the effects of legitimation, heterogeneity among players, and uncertain capacity on market entry decisions in an experimental game setting. We find that heterogeneity and uncertain capacity did little to impair the high levels of coordination between aggregate entry decisions and market capacity. However, introducing legitimation made it difficult for entrants to coordinate their entry decisions at or near threshold values. We also find substantial individual differences in entry strategies - a necessary condition to achieve equilibrium - and no movement away form equilibrium predictions in the direction of Pareto optimal outcomes.