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Evolutionarily stable conjectures and other regarding preferences in duopoly games

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  • Ilkka Leppänen

    (Loughborough University)

Abstract

We study the evolutionary selection of conjectures in duopoly games when players have other regarding preferences, i.e. preferences over payoff distributions. In both the Cournot and Bertrand duopoly games, the consistent conjectures are independent of other regarding preferences. Both duopoly games have evolutionarily stable conjectures that depend on other regarding preferences but that do not coincide with the consistent conjectures. For increasingly spiteful preferences, the evolutionarily stable conjectures implicate low quantities in the Cournot game and high prices in the Bertrand game, whereas the inverse relationships hold for the consistent conjectures. We discuss our findings in the context of ultimate and proximate causation.

Suggested Citation

  • Ilkka Leppänen, 2018. "Evolutionarily stable conjectures and other regarding preferences in duopoly games," Journal of Evolutionary Economics, Springer, vol. 28(2), pages 347-364, April.
    • Handle: RePEc:spr:joevec:v:28:y:2018:i:2:d:10.1007_s00191-017-0529-1
    DOI: 10.1007/s00191-017-0529-1
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    More about this item

    Keywords

    Duopoly; Conjectural variations; Other regarding preferences; Evolutionary stability;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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