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Playing Cournot although they shouldn’t

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Author Info

  • Miguel Fonseca

    ()

  • Steffen Huck

    ()

  • Hans-Theo Normann

    ()

Abstract

In this note, we experimentally investigate the extended game with action commitment in a Cournot duopoly with asymmetric cost. Risk dominance considerations allow to select a unique equilibrium in which the low-cost firm is the Stackelberg leader. The data, however, do not support the theory as simultaneous-move play is modal. Average output choices are in line with the Cournot equilibrium. This suggests that Cournot is a much more robust predictor for competition in markets than theory suggests. Copyright Springer-Verlag Berlin/Heidelberg 2005

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File URL: http://hdl.handle.net/10.1007/s00199-003-0456-2
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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 25 (2005)
Issue (Month): 3 (04)
Pages: 669-677

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Handle: RePEc:spr:joecth:v:25:y:2005:i:3:p:669-677

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Web page: http://link.springer.de/link/service/journals/00199/index.htm

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Related research

Keywords: Commitment; Endogenous timing; Experimental economics; Risk dominance; Stackelberg.;

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Citations

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Cited by:
  1. Jeroen Hinloopen & Wieland Mueller & Hans-Theo Normann, 2011. "Output Commitment through Product Bundling: Experimental Evidence," Tinbergen Institute Discussion Papers 11-170/1, Tinbergen Institute.
  2. Anders Poulsen & Michael Roos, 2010. "Do people make strategic commitments? Experimental evidence on strategic information avoidance," Experimental Economics, Springer, vol. 13(2), pages 206-225, June.
  3. Miguel Fonseca & Wieland Müller & Hans-Theo Normann, 2006. "Endogenous timing in duopoly: experimental evidence," International Journal of Game Theory, Springer, vol. 34(3), pages 443-456, October.
  4. Anders Poulsen & Jonathan Tan, 2007. "Information acquisition in the ultimatum game: An experimental study," Experimental Economics, Springer, vol. 10(4), pages 391-409, December.
  5. Santos-Pinto, Luís, 2008. "Making sense of the experimental evidence on endogenous timing in duopoly markets," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 657-666, December.
  6. Müller, W., 2003. "Allowing for Two Production Periods in the Cournot Duopoly: Experimental Evidence," Discussion Paper 2003-42, Tilburg University, Center for Economic Research.
  7. Hildenbrand, Andreas, 2012. "Is a "firm" a firm? A Stackelberg experiment," Economics Discussion Papers 2012-53, Kiel Institute for the World Economy.
  8. Anthony Ziegelmeyer & Katinka Pantz, 2005. "Collaborative Networks in Experimental Triopolies," Papers on Strategic Interaction 2005-38, Max Planck Institute of Economics, Strategic Interaction Group.
  9. Waichman, Israel & Requate, Till & Siang, Ch'ng Kean, 2010. "Pre-play communication in Cournot competition: An experiment with students and managers," Economics Working Papers 2010,09, Christian-Albrechts-University of Kiel, Department of Economics.
  10. Shakun Datta Mago & Emmanuel Dechenaux, 2009. "Price leadership and firm size asymmetry: an experimental analysis," Experimental Economics, Springer, vol. 12(3), pages 289-317, September.
  11. Jeroen Hinloopen & Wieland Müller & Hans-Theo Normann, 2011. "Output Commitment through Product Bundling: Experimental Evidence," Vienna Economics Papers 1112, University of Vienna, Department of Economics.
  12. Poulsen, Anders, 2007. "Learning to Make Strategic Moves: Experimental Evidence," MPRA Paper 10927, University Library of Munich, Germany.
  13. Hildenbrand, Andreas, 2010. "Cournot or Stackelberg competition? A survey on experimental evidence," MPRA Paper 24468, University Library of Munich, Germany.
  14. Poulsen, Anders U. & Tan, Jonathan H.W., 2004. "Can Information Backfire? - Experimental Evidence from the Ultimatum Game," Working Papers 04-16, University of Aarhus, Aarhus School of Business, Department of Economics.

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