Clock Games: Theory and Experiments

Timing is crucial in situations ranging from currency attacks, to product introductions, to starting a revolution. These settings share the feature that payo®s depend critically on the timing of a few other key players—and their moves are uncertain. To capture this, we introduce the notion of clock games and experimentally test them. Each player’s clock starts on receiving a signal about a payo® relevant state variable. Since the timing of the signals is random, clocks are de-synchronized. A player must decide how long, if at all, to delay his move after receiving the signal. We show that (i) equilibrium is always characterized by strategic delay—regardless of whether moves are observable or not; (ii) delay decreases as clocks become more synchronized and increases as information becomes more concentrated; (iii) When moves are observable, players “herd” immediately after any player makes a move. We then show, in a series of experiments, that key predictions of the model are consistent with observed behavior.