Playing Cournot although they shouldn’t
In this note, we experimentally investigate the extended game with action commitment in a Cournot duopoly with asymmetric cost. Risk dominance considerations allow to select a unique equilibrium in which the low-cost firm is the Stackelberg leader. The data, however, do not support the theory as simultaneous-move play is modal. Average output choices are in line with the Cournot equilibrium. This suggests that Cournot is a much more robust predictor for competition in markets than theory suggests. Copyright Springer-Verlag Berlin/Heidelberg 2005
Volume (Year): 25 (2005)
Issue (Month): 3 (April)
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