Strategic decisions of new technology adoption under asymmetric information: a game-theoretic model

In this paper we explore strategic decision making in new technology adoption by using economic analysis. We show how asymmetric information affects firms' decisions to adopt the technology. We do so in a two-stage game-theoretic model where the first-stage investment results in the acquisition of a new technology that, in the second stage, may give the firm a competitive advantage in the product market. We compare two information structures under which two competing firms have asymmetric information about the future performance (i.e., postadoption costs) of the new technology.