Trial & Error to Collusion - The Discrete Case
AbstractIn this note we study a very simple trial & error learning process in the context of a Cournot oligopoly. Without any knowledge of the payoff functions players increase, respectively decrease, their quantity by one unit as long as this leads to higher profits. We show that despite the absence of any coordination or punishing device this process converges to a collusive outcome.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse6_2000.
Date of creation: May 2000
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learning; Cournot oligopoly;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- 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-2000-08-26 (All new papers)
- NEP-EVO-2000-08-26 (Evolutionary Economics)
- NEP-IND-2000-08-26 (Industrial Organization)
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