Stability of the Cournot Process - Experimental Evidence
AbstractWe report results of experiments designed to test the predictions of the best reply process. In a Cournot oligopoly with four firms, the best reply process should theoretically explode if demand and cost functions are linear. We find, however, no experimental evidence of such instability. Moreover, we find no differences between a market which theoretically should not converge to Nash equilibrium and one which should converge because of inertia. We investigate the power of several learning dynamics to explain this unpredicted stability.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse1_2002.
Date of creation: Jan 2002
Date of revision:
Contact details of provider:
Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 6884
Web page: http://www.bgse.uni-bonn.de
best reply process; Cournot oligopoly; learning experiments; imitation;
Other versions of this item:
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2002. "Stability of the Cournot process - experimental evidence," International Journal of Game Theory, Springer, vol. 31(1), pages 123-136.
- Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 1997. "Stability of the Cournot Process - Experimental Evidence," Experimental 9707002, EconWPA.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-04-25 (All new papers)
- NEP-EXP-2002-04-25 (Experimental Economics)
- NEP-MIC-2002-04-25 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 1999.
"Learning in Cournot Oligopoly--An Experiment,"
Royal Economic Society, vol. 109(454), pages C80-95, March.
- Fernando Vega Redondo, 1996.
"The evolution of walrasian behavior,"
Working Papers. Serie AD
1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Abbink, Klaus & Abdolkarim Sadrieh, 1995. "RatImage - research Assistance Toolbox for Computer-Aided Human Behavior Experiments," Discussion Paper Serie B 325, University of Bonn, Germany.
- Cox, James C. & Walker, Mark, 1998. "Learning to play Cournot duopoly strategies," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 141-161, August.
- Rassenti, Stephen & Reynolds, Stanley S. & Smith, Vernon L. & Szidarovszky, Ferenc, 2000. "Adaptation and convergence of behavior in repeated experimental Cournot games," Journal of Economic Behavior & Organization, Elsevier, vol. 41(2), pages 117-146, February.
- Holt, Charles A, 1985. "An Experimental Test of the Consistent-Conjectures Hypothesis," American Economic Review, American Economic Association, vol. 75(3), pages 314-25, June.
- Villena, Mauricio G. & Zecchetto, Franco, 2010.
"Subject-specific Performance Information can worsen the Tragedy of the Commons: Experimental Evidence,"
27783, University Library of Munich, Germany, revised 02 Dec 2010.
- Villena, Mauricio G. & Zecchetto, Franco, 2011. "Subject-specific performance information can worsen the tragedy of the commons: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 330-347, June.
- Halkos, George, 2009. "A Differential game approach in the case of a polluting oligopoly," MPRA Paper 23742, University Library of Munich, Germany.
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004.
"Two are few and four are many: number effects in experimental oligopolies,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 53(4), pages 435-446, April.
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2001. "Two are Few and Four are Many: Number Effects in Experimental Oligopolies," Bonn Econ Discussion Papers bgse12_2001, University of Bonn, Germany.
- Gürerk, Özgür & Selten, Reinhard, 2010.
"The Effect of Payoff Tables on Experimental Oligopoly Behavior,"
22489, University Library of Munich, Germany.
- Özgür Gürerk & Reinhard Selten, 2012. "The effect of payoff tables on experimental oligopoly behavior," Experimental Economics, Springer, vol. 15(3), pages 499-509, September.
- Davis, Douglas, 2011.
"Behavioral convergence properties of Cournot and Bertrand markets: An experimental analysis,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 80(3), pages 443-458.
- Douglas D. Davis, 2008. "Behavioral Convergence Properties of Cournot and Bertrand Markets: An Experimental Analysis," Working Papers 0808, VCU School of Business, Department of Economics, revised Jan 2011.
- Douglas D. Davis & Korenok Oleg, 2010. "Nominal Price Shocks in Monopolistically Competitive Markets: An Experimental Analysis," Working Papers 1003, VCU School of Business, Department of Economics, revised Jun 2011.
- Arango, Santiago & Moxnes, Erling, 2012. "Commodity cycles, a function of market complexity? Extending the cobweb experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 321-334.
- Halkos, George & Papageorgiou, George, 2012. "Pollution abatement and reservation prices in a market game," MPRA Paper 42150, University Library of Munich, Germany.
- Hommes, C.H. & Ochea, M. & Tuinstra, J., 2011. "On the stability of the Cournot equilibrium: An evolutionary approach," CeNDEF Working Papers 11-10, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
- Davis, Douglas & Korenok, Oleg, 2011. "Nominal shocks in monopolistically competitive markets: An experiment," Journal of Monetary Economics, Elsevier, vol. 58(6), pages 578-589.
- Gary E Bolton & Axel Ockenfels, 1997. "A Theory of Equity, Reciprocity, and Competition," Levine's Working Paper Archive 1889, David K. Levine.
- Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
- Bigoni, Maria & Suetens, Sigrid, 2012. "Feedback and dynamics in public good experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 86-95.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (BGSE Office).
If references are entirely missing, you can add them using this form.