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Through Trial and Error to Collusion

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Listed:
  • Steffen Huck
  • Hans-Theo Normann
  • Joerg Oechssler

Abstract

In this article we study a very simple trial and error learning process in the context of a Cournot oligopoly. Without any knowledge of the payoff functions players increase, respectively decrease, their quantity as long as this leads to higher profits. We show that despite the absence of any coordination or punishing device this process converges to the joint-profit-maximizing outcome. Copyright IERE.

Suggested Citation

  • Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 2004. "Through Trial and Error to Collusion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 205-224, February.
  • Handle: RePEc:ier:iecrev:v:45:y:2004:i:1:p:205-224
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