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Convergence in Finite Cournot Oligopoly with Social and Individual Learning

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Author Info
Thomas VALLEE (LEN - IAE Nantes)
Murat YILDIZOGLU (GREThA)

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Abstract

Convergence to Nash equilibrium in Cournot oligopoly is a problem that recurrently arises as a subject of study in economics. The development of evolutionary game theory has provided an equilibrium concept more directly connected with adjustment dynamics and the evolutionary stability of the equilibria of the Cournot game has been studied by several articles. Several articles show that the Walrasian equilibrium is the stable evolutionary solution of the Cournot game. Vriend (2000) proposes to use genetic algorithm for studying learning dynamics in this game and obtains convergence to Cournot equilibrium with individual learning. We show in this article how social learning gives rise to Walras equilibrium and why, in a general setup, individual learning can effectively yield convergence to Cournot instead of Walras equilibrium. We illustrate these general results by computational experiments.

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Paper provided by Groupe de Recherche en Economie Théorique et Appliquée in its series Cahiers du GREThA with number 2007-07.

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Date of creation: 2007
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Handle: RePEc:grt:wpegrt:2007-07

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Related research
Keywords: Cournot oligopoly; Learning; Evolution; Selection; Evolutionary stability; Nash equilibrium; Genetic algorithms;

Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
C63 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computational Techniques
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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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.:
  1. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215.
  2. Vriend, Nicolaas J., 2000. "An illustration of the essential difference between individual and social learning, and its consequences for computational analyses," Journal of Economic Dynamics and Control, Elsevier, vol. 24(1), pages 1-19, January. [Downloadable!] (restricted)
  3. Thomas Riechmann, 2006. "Mixed motives in a Cournot game," Economics Bulletin, Economics Bulletin, vol. 4(29), pages 1-8. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Protopapas, M.K. & Kosmatopoulos, E.B. & Battaglia, F., 2009. "Coevolutionary Genetic Algorithms for Establishing Nash Equilibrium in Symmetric Cournot Games," MPRA Paper 15375, University Library of Munich, Germany. [Downloadable!]
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