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Through Trial & Error to Collusion

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Author Info

  • Steffen Huck

    (Humboldt University, Berlin)

  • Hans-Theo Normann

    (Humboldt University, Berlin)

  • Joerg Oechssler

    (Humboldt University, Berlin)

Abstract

In 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 this process converges to a collusive outcome.

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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 9811004.

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Date of creation: 19 Nov 1998
Date of revision: 24 Nov 1998
Handle: RePEc:wpa:wuwpga:9811004

Note: Pages: 12; figure included in the second file
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Web page: http://128.118.178.162

Related research

Keywords: learning; game theory; oligopoly; collusion;

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Cited by:
  1. Armstrong, Mark & Huck, Steffen, 2010. "Behavioral economics as applied to firms: a primer," MPRA Paper 20356, University Library of Munich, Germany.
  2. Peter Duersch & Albert Kolb & Joerg Oechssler & Burkhard Schipper, 2005. "Rage Against the Machines: How Subjects Learn to Play Against Computers," Game Theory and Information 0510012, EconWPA.
  3. Carlo Altavilla & Luigi Luini & Patrizia Sbriglia, 2005. "Social Learning in Market Games," Labsi Experimental Economics Laboratory University of Siena 003, University of Siena.

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