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Competing Against Simulated Equilibrium Price Dispersions: An Experiment On Internet-Assisted Search Markets

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Author Info

  • Aurora García-Gallego

    ()
    (Universitat Jaume I)

  • Nikolaos Georgantzís

    ()
    (Universitat Jaume I)

  • Pedro Pereira

    ()
    (Autoridade da Concorrência)

  • José C. Pernías-Cerrillo

    ()
    (LINEEX, Universitat de Valencia)

Abstract

In a four-treatment experiment, we test some of the hypotheses in García-Gallego et al. (2004) concerning competition among a number of firms of which some (or all) are indexed by a price-comparison engine facilitating buyers’ search process. In this paper, we isolate individual behavior from noise due to other players’ actions and learning, facing each subject with simulated rivals whose prices are extracted from mixed strategy equilibrium distributions. We find systematic deviations from both theoretical distributions and previous data obtained in sessions where all players were human. Specifically, departures of experimental data from the corresponding theoretical predictions are enhanced in this setting as compared to our previous research in which all agents were represented by human players. This suggests that the divergence between theoretical and observed price reported there should not be attributed to noisy learning and strategic uncertainty due to subjects’ interaction with other players. Furthermore, economic tests on players’ risk attitudes organize pricing behavior in meaningful, although not always compatible, ways.

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File URL: http://www.netinst.org/Georgantzis.pdf
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Bibliographic Info

Paper provided by NET Institute in its series Working Papers with number 05-12.

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Length: 30 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:net:wpaper:0512

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Web page: http://www.NETinst.org/

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Cited by:
  1. Aurora García-Gallego & Nikolaos Georgantzís & Ainhoa Jaramillo-Gutiérrez & Melanie Parravano, 2010. "The lottery-panel task for bi-dimensional parameter-free elicitation of risk attitudes," ThE Papers 10/12, Department of Economic Theory and Economic History of the University of Granada..

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