Information Externalities and Strategic Delay in Technology Adoption and Diffusion
We study an in nite period incomplete information dynamic game of a nite number of agents adopting a new technology with pure information externalities. Each agent has private information about his idiosyncratic adoption cost, but share the same public information, released by early adopters, about the technology's eÆciency, which is common to all agents. We show that a unique symmetric pure strategy Perfect Bayesian equilibrium exists. The adoption process may start late, stop temporarily, and last in nite periods. The di usion path of the technology can also be logistic. More eÆcient communication about the technology slows down the early adoption process, but speeds up the di usion in later periods. It may raise the long-run adoption rate of a relatively good technology, but reduce that of a mediocre technology. On the other hand, stronger beliefs about agents' costs tend to speed up early adoption and slow down the di usion later on. They do not alter the long-run adoption rate of extremely good technologies, but can either raise or reduce the adoption rate for other kinds of technologies.