Stability of the Cournot process - experimental evidence
We report results of experiments designed to test the predictions of the best-reply process. In a Cournot oligopoly with four firms, the best-reply process should theoretically explode if demand and cost functions are linear. We find, however, no experimental evidence of such instability. Moreover, we find no differences between a market which theoretically should not converge to Nash equilibrium and one which should converge because of inertia. We investigate the power of several learning dynamics to explain this unpredicted stability.
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Volume (Year): 31 (2002)
Issue (Month): 1 ()
|Note:||Received May 1997/Revised June 2002|
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References listed on IDEAS
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