REDUCING INFORMATION ASYMMETRIES IN MARKET ENTRY DECISIONS

A Bayesian belief network is adopted to structure and manage an entry decision problem, where a potential entrant has to evaluate the profit ability of a given market, depending on an established firm's unknown and unobservable multidimensional type. A multiperiod multisignal mode l is defined to take account of strategic interaction processes betwee n the incumbent and the potential competitor. Since significant theore tical and computational issues prevent us from finding optimal strateg ies, a myopic policy is discussed that leads to a reasonable outcome. An application example of the proposed solution procedure is also pres ented.