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Playing Cournot although they shouldn’t

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Author Info
Miguel Fonseca ()
Steffen Huck ()
Hans-Theo Normann ()

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

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  1. 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. [Downloadable!] (restricted)
    Other versions:
  2. Daniele Nosenzo & Martin Sefton, 2009. "Endogenous Move Structure And Voluntary Provision Of Public Goods: Theory And Experiment," Discussion Papers 2009-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  3. 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. [Downloadable!]
  4. Muller, W., 2003. "Allowing for two production periods in the cournot duopoly: experimental evidence," Discussion Paper 42, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  5. Anthony Ziegelmeyer & Katinka Pantz, 2005. "Collaborative Networks in Experimental Triopolies," Papers on Strategic Interaction 2005-38, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
  6. 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. [Downloadable!] (restricted)
  7. Poulsen, Anders, 2007. "Learning to Make Strategic Moves: Experimental Evidence," MPRA Paper 10927, University Library of Munich, Germany. [Downloadable!]
  8. Anders U. Poulsen & Michael V. M. Roos, 2009. "Do People Make Strategic Moves? Experimental Evidence on Strategic Information Avoidance," Discussion Papers 09-06, University of Copenhagen. Department of Economics. [Downloadable!]
  9. Santos-Pinto, Luís, 2006. "Making Sense of the Experimental Evidence on Endogenous Timing in Duopoly Markets," MPRA Paper 3142, University Library of Munich, Germany, revised 27 Apr 2007. [Downloadable!]
    Other versions:
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