Fig. 2

Probabilities of the four strategies under ambiguity when the expected arrival time, \({\mathbb{E}}(T)\), varies. \(PC\), \(PB\), \(PL\), and \(PG\) represent the probabilities of pursuing compulsive, buy-and-hold, leapfrog, and laggard strategies, respectively. The parameter \(c\) represents the degree of ambiguity perceived by managers. When \(c=0.5\), ambiguity is absent, implying that managers are neutral toward ambiguity. The upper left figure shows Fig. 1 of Grenadier and Weiss (1997). As \(c\) decreases, the degree of ambiguity increases. When \(c=0.2\), the degree of ambiguity is the highest. Leapfrog and laggard strategies dominate in a market with rapid innovation (low \({\mathbb{E}}(T)\)), whereas compulsive and buy-and-hold strategies dominate in a market with slow innovation (high \({\mathbb{E}}(T)\))