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Evaluating Competitive Strategies

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  • Scott Moss
  • Huw David Dixon
  • Steven Wallis

Abstract

In this paper we introduce a conception of learning which is a natural extension of economists' representations of learning and which is natural to develop using KBS technology. In the particular form of KBS we use, rule conditions and actions are well‐formulated formulae of first‐order predicate logic (FOPL). As a result, the simulation results obtained from these models are no less analytical than those of pure analytic models. Our results are further strengthened by an experimental design for simulations of competitive behaviour which eliminates implicit bias in the selection of possible behaviours. The system is applied to the Cournot duopoly model. We find that modest intelligence on the part of at least one duopolist systematically increases the profits of both.

Suggested Citation

  • Scott Moss & Huw David Dixon & Steven Wallis, 1995. "Evaluating Competitive Strategies," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 4(4), pages 245-258, December.
    • Handle: RePEc:wly:isacfm:v:4:y:1995:i:4:p:245-258
    DOI: 10.1002/j.1099-1174.1995.tb00095.x
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    References listed on IDEAS

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    1. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    2. Stanford, William G., 1986. "On continuous reaction function equilibria in duopoly supergames with mean payoffs," Journal of Economic Theory, Elsevier, vol. 39(1), pages 233-250, June.
    3. R. M. Cyert & M. H. DeGroot, 1970. "Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 410-429.
    4. Maskin, Eric & Tirole, Jean, 1987. "A theory of dynamic oligopoly, III : Cournot competition," European Economic Review, Elsevier, vol. 31(4), pages 947-968, June.
    5. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
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