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Organization, learning and cooperation

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Author Info

  • Barr, Jason
  • Saraceno, Francesco

Abstract

This paper models the organization of the firm as a type of artificial neural network in a duopoly setting. The firm plays a repeated Prisoner's Dilemma type game, and must also learn to map environmental signals to demand parameters and to its rival's willingness to cooperate. We study the prospects for cooperation given the need for the firm to learn the environment and its rival's output. We show how profit and cooperation rates are affected by the sizes of both firms, their willingness to cooperate, and by environmental complexity. In addition, we investigate equilibrium firm size and cooperation rates.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 70 (2009)
Issue (Month): 1-2 (May)
Pages: 39-53

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Handle: RePEc:eee:jeborg:v:70:y:2009:i:1-2:p:39-53

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Artificial neural networks Prisoner's Dilemma Cooperation Firm learning;

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References

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  1. Edward J Green & Robert H Porter, 1997. "Noncooperative Collusion Under Imperfect Price Information," Levine's Working Paper Archive 1147, David K. Levine.
  2. Cyert, Richard M & DeGroot, Morris H, 1973. "An Analysis of Cooperation and Learning in a Duopoly Context," American Economic Review, American Economic Association, vol. 63(1), pages 24-37, March.
  3. Verboven, Frank, 1997. "Collusive behavior with heterogeneous firms," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 121-136, May.
  4. Carley, Kathleen M., 1996. "A comparison of artificial and human organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 31(2), pages 175-191, November.
  5. Myong-Hun Chang & Joseph E Harrington Jr, 2004. "Agent-Based Models of Organizations," Economics Working Paper Archive 515, The Johns Hopkins University,Department of Economics.
  6. Barr, Jason & Saraceno, Francesco, 2002. "A computational theory of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 49(3), pages 345-361, November.
  7. Chung-Ming Kuan, 2006. "Artificial Neural Networks," IEAS Working Paper : academic research 06-A010, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  8. DeCanio, Stephen J. & Watkins, William E., 1998. "Information processing and organizational structure," Journal of Economic Behavior & Organization, Elsevier, vol. 36(3), pages 275-294, August.
  9. Ernst Fehr & Joseph Henrich & Robert Boyd, 2003. "In Search of Homo Economicus: Behavioral Experiments in 15 Small- Scale Societies," Microeconomics 0305009, EconWPA.
  10. Barr, Jason & Saraceno, Francesco, 2005. "Cournot competition, organization and learning," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 277-295, January.
  11. Cho, In-Koo, 1994. "Bounded Rationality, Neural Network and Folk Theorem in Repeated Games with Discounting," Economic Theory, Springer, vol. 4(6), pages 935-57, October.
  12. Ariel Rubinstein, 1997. "Finite automata play the repeated prisioners dilemma," Levine's Working Paper Archive 1639, David K. Levine.
  13. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253.
  14. Casson, Mark, 1991. "The Economics of Business Culture: Game Theory, Transaction Costs, and Economic Performance," OUP Catalogue, Oxford University Press, number 9780198283751.
  15. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
  16. Vriend, Nicolaas J., 2000. "An illustration of the essential difference between individual and social learning, and its consequences for computational analyses," Journal of Economic Dynamics and Control, Elsevier, vol. 24(1), pages 1-19, January.
  17. Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-46, September.
  18. Ho, Teck-Hua, 1996. "Finite automata play repeated prisoner's dilemma with information processing costs," Journal of Economic Dynamics and Control, Elsevier, vol. 20(1-3), pages 173-207.
  19. Miller, John H., 1996. "The coevolution of automata in the repeated Prisoner's Dilemma," Journal of Economic Behavior & Organization, Elsevier, vol. 29(1), pages 87-112, January.
  20. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414.
  21. Tesfatsion, Leigh S., 2002. "Agent-Based Computational Economics: Growing Economies from the Bottom Up," Staff General Research Papers 5075, Iowa State University, Department of Economics.
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Citations

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Cited by:
  1. Jason Barr & Francesco Saraceno, 2005. "Cournot Competition and Endogenous Firm Size," Working Papers Rutgers University, Newark 2005-001, Department of Economics, Rutgers University, Newark.
  2. Eva Bolfikova & Daniela Hrehova & Jana Frenova, 2010. "Manager’s decision-making in organizations empirical analysis of bureaucratic vs. learning approach," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 28(1), pages 135-163.
  3. Jason Barr & Francesco Saraceno, 2005. "Modeling the Firm as an Artificial Neural Network," Working Papers Rutgers University, Newark 2005-011, Department of Economics, Rutgers University, Newark.

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