Satisficing and prior-free optimality in price competition: a theoretical and experimental analysis
AbstractOn a heterogeneous experimental oligopoly market, sellers choose a price, specify a set-valued prior-free conjecture about the others' behavior, and form their own profit-aspiration for each element of their conjecture. We formally define the concepts of satisficing and prior-free optimality and check if seller participants behave in accordance with them. We find that seller participants are satisficers, but fail to be "prior-free" optimal.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2008-067.
Date of creation: 09 Sep 2008
Date of revision:
Satisficing behavior; Bounded rationality; Triopoly;
Find related papers by JEL classification:
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-20 (All new papers)
- NEP-CBE-2008-09-20 (Cognitive & Behavioural Economics)
- NEP-COM-2008-09-20 (Industrial Competition)
- NEP-EXP-2008-09-20 (Experimental Economics)
- NEP-MIC-2008-09-20 (Microeconomics)
- NEP-MKT-2008-09-20 (Marketing)
- NEP-UPT-2008-09-20 (Utility Models & Prospect Theory)
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- Güth, Werner & Vittoria Levati, M. & Ploner, Matteo, 2010.
"Satisficing in strategic environments: A theoretical approach and experimental evidence,"
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics),
Elsevier, vol. 39(5), pages 554-561, October.
- Werner Güth & M. Vittoria Levati & Matteo Ploner, 2008. "Satisficing in strategic environments: a theoretical approach and experimental evidence," Jena Economic Research Papers 2008-078, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Siegfried Berninghaus & Werner Güth & M. Levati & Jianying Qiu, 2011. "Satisficing search versus aspiration adaptation in sales competition: experimental evidence," International Journal of Game Theory, Springer, vol. 40(1), pages 179-198, February.
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