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Information and learning in oligopoly: An experiment

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  • Bigoni, Maria
  • Fort, Margherita

Abstract

This paper presents an experiment on learning in repeated games, which complements the analysis of playersʼ actual choices with data on the information acquisition process they follow. Subjects play a repeated Cournot oligopoly, with limited a priori information. The econometrics hinges on a model built upon Experience Weighted Attraction learning, and the simultaneous analysis of data on the information gathered and on actions taken by the subjects. Results suggest that learning is a composite process, in which different components coexist. Adaptive learning emerges as the leading element, but when subjects look at the strategies individually adopted by their competitors they tend to imitate the most successful behavior, which makes markets more competitive. Reinforcement learning also plays a role, as subjects favor strategies that have yielded higher profits in the past.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 81 (2013)
Issue (Month): C ()
Pages: 192-214

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Handle: RePEc:eee:gamebe:v:81:y:2013:i:c:p:192-214

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Web page: http://www.elsevier.com/locate/inca/622836

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Keywords: Information; Imitation; Cournot oligopoly; EWA learning;

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References

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Cited by:
  1. Mark Armstrong & Steffen Huck, 2011. "Behavioral Economics as Applied to Firms: A Primer," Antitrust Chronicle, Competition Policy International, vol. 1.
  2. Nikolas Tsakas, 2013. "Diffusion by Imitation: The Importance of Targeting Agents," 2013 Papers pts99, Job Market Papers.
  3. Bigoni, Maria & Fort, Margherita, 2013. "Information and Learning in Oligopoly: An Experiment," IZA Discussion Papers 7125, Institute for the Study of Labor (IZA).
  4. Buckert, Magdalena & Oechssler, Jörg & Schwieren, Christiane, 2014. "Imitation under stress," Working Papers 0556, University of Heidelberg, Department of Economics.

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