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The Propagation of Cooperation in a Model of Learning with Endogenous Aspirations

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Author Info
Paolo Lupi
Abstract

In this paper we build a spatial, aspiration-based model of learning in the context of Cournot oligopoly from which we want to explore the conditions that lead to the emergence of cooperation among firms. We consider an economy consisting of many identical duopolies; each duopoly is placed on a square of a torus. The duopolists are boundedly rational agents which adopt a very simple behavioral rule: if they are earning at least average profits, they do not change their strategies; if they are earning below-average profits they imitate the strategy adopted by one of their neighbors. We consider many variations to this simple setup and, in almost all cases, as in Dixon (1998) and Dixon and Lupi (1997) we get results that support cooperation among firms.

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Paper provided by Santa Fe Institute in its series Research in Economics with number 98-06-052e.

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Date of creation: Jun 1998
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Handle: RePEc:wop:safire:98-06-052e

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  1. Nicolas Jonard & Murat Yildizoglu, . "Technological Diversity in an Evolutionary Industry Model with Localized Learning and Network Externalities," Computing in Economics and Finance 1997 13, Society for Computational Economics. [Downloadable!]
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  2. Dixon, Huw David, 1998. "Keeping Up With the Joneses: Competition and the Evolution of Collusion in an Oligopolistic Economy," CEPR Discussion Papers 1810, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Aderlini, L. & Ianni, A., 1993. "Path Dependence and Learning from Neighbours," Papers 186, Cambridge - Risk, Information & Quantity Signals.
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  4. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-71, September. [Downloadable!] (restricted)
  5. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July. [Downloadable!] (restricted)
  6. Ramon Marimon & Ellen McGrattan, 1993. "On Adaptive Learning in Strategic Games," Economics Working Papers 24, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  7. Canning, David, 1992. "Average behavior in learning models," Journal of Economic Theory, Elsevier, vol. 57(2), pages 442-472, August. [Downloadable!] (restricted)
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  8. Huw D. Dixon & Paolo Lupi, . "Learning With a Known Average: a Simulation Study of Alternative Learning Rules," Computing in Economics and Finance 1997 154, Society for Computational Economics. [Downloadable!]
    Other versions:
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