Strategic Experimentation with Private Payoffs
Computer Science and Game Theory
2025-12-09 v1 Optimization and Control
Abstract
We study a strategic experimentation game with exponential bandits, in which experiment outcomes are private. The equilibrium amount of experimentation is always higher than in the benchmark case where experiment outcomes are publicly observed. In addition, for pure equilibria, the equilibrium amount of experimentation is at least socially optimal, and possibly higher. We provide a tight bound on the degree of over-experimentation. The analysis rests on a new form of encouragement effect, according to which a player may hide the absence of a success to encourage future experimentation by the other player, which incentivizes current experimentation.
Keywords
Cite
@article{arxiv.2512.06180,
title = {Strategic Experimentation with Private Payoffs},
author = {Jérôme Renault and Eilon Solan and Nicolas Vieille},
journal= {arXiv preprint arXiv:2512.06180},
year = {2025}
}