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Reciprocal strategies and aspiration levels in a Cournot-Stackelberg experiment

Author

Listed:
  • Steffen Huck

    (University College London & ELSE)

  • Brian Wallace

    (Royal Holloway)

Abstract

We examine behavior in Cournot and Stackelberg markets in a simple experiment where participants experience both market forms. Moreover, Stackelberg followers have to submit full response strategies. Our main finding is that Stackelberg followers employ rather flat, reciprocal response function, i.e., they punish leaders in who try to exploit their strategic adavantage and are willing to cooperate with cooperative leaders. Also, it turns out that prior exposure to a symmetric market makes followers more aggressive which hints at the role of aspiration levels in markets.

Suggested Citation

  • Steffen Huck & Brian Wallace, 2002. "Reciprocal strategies and aspiration levels in a Cournot-Stackelberg experiment," Economics Bulletin, AccessEcon, vol. 3(3), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-01c90001
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    References listed on IDEAS

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    Cited by:

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    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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