IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Information and Learning in Oligopoly: an Experiment

This paper presents an experiment on learning in repeated games, which complements the analysis of players' actual choices with data on the information acquisition process they follow. Subjects play a repeated Cournot oligopoly, with limited a priori information. The econometrics hinges on a model built upon Experience Weighted Attraction learning, and the simultaneous analysis of data on the information gathered and on actions taken by the subjects. Results suggest that learning is a composite process, in which different components coexist. Adaptive learning emerges as the leading element, but when subjects look at the strategies individually adopted by their competitors they tend to imitate the most successful behavior, which makes markets more competitive. Reinforcement learning also plays a role, as subjects favor strategies that have yielded higher profits in the past.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://amsacta.unibo.it/3719/1/WP860.pdf
Download Restriction: no

Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp860.

as
in new window

Length:
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:bol:bodewp:wp860
Contact details of provider: Postal:
Piazza Scaravilli, 2, and Strada Maggiore, 45, 40125 Bologna

Phone: +39 051 209 8019 and 2600
Fax: +39 051 209 8040 and 2664
Web page: http://www.dse.unibo.it

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Friedman, Daniel & Huck, Steffen & Oprea, Ryan & Weidenholzer, Simon, 2012. "From imitation to collusion: Long-run learning in a low-information environment," Discussion Papers, Research Unit: Economics of Change SP II 2012-301, Social Science Research Center Berlin (WZB).
  2. Jose Apesteguia & Steffen Huck & Jörg Oechssler, 2003. "Imitation - Theory and Experimental Evidence," Bonn Econ Discussion Papers bgse20_2003, University of Bonn, Germany, revised Aug 2004.
  3. Rand, David G & Fudenberg, Drew & Dreber, Anna, 2012. "Slow to Anger and Fast to Forgive: Cooperation in an Uncertain World," Scholarly Articles 11223697, Harvard University Department of Economics.
  4. Fernando Vega-Redondo, 1997. "The Evolution of Walrasian Behavior," Econometrica, Econometric Society, vol. 65(2), pages 375-384, March.
  5. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
  6. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 1999. "Learning in Cournot Oligopoly--An Experiment," Economic Journal, Royal Economic Society, vol. 109(454), pages C80-95, March.
  7. Ho, Teck H. & Camerer, Colin F. & Chong, Juin-Kuan, 2007. "Self-tuning experience weighted attraction learning in games," Journal of Economic Theory, Elsevier, vol. 133(1), pages 177-198, March.
  8. Bigoni, Maria, 2010. "What do you want to know? Information acquisition and learning in experimental Cournot games," Research in Economics, Elsevier, vol. 64(1), pages 1-17, March.
  9. Pedro Dal Bo & Guillaume R. Frochette, 2011. "The Evolution of Cooperation in Infinitely Repeated Games: Experimental Evidence," American Economic Review, American Economic Association, vol. 101(1), pages 411-29, February.
  10. Maria Bigoni, 2008. "Information and Learning in Oligopoly: an Experiment," "Marco Fanno" Working Papers 0072, Dipartimento di Scienze Economiche "Marco Fanno".
  11. Gabriele Camera & Marco Casari, 2009. "Cooperation among Strangers under the Shadow of the Future," American Economic Review, American Economic Association, vol. 99(3), pages 979-1005, June.
  12. Theo Offerman & Jan Potters & Joep Sonnemans, 1997. "Imitation and Belief Learning in an Oligopoly Experiment," Tinbergen Institute Discussion Papers 97-116/1, Tinbergen Institute.
  13. Apesteguia, Jose & Huck, Steffen & Oechssler, Jörg & Weidenholzer, Simon, 2007. "Imitation and the Evolution of Walrasian Behavior: Theoretically Fragile but Behaviorally Robust," Sonderforschungsbereich 504 Publications 07-69, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  14. Pedro Dal Bó, 2002. "Cooperation Under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games," Working Papers 2002-20, Brown University, Department of Economics.
  15. Johnson, Eric J. & Camerer, Colin & Sen, Sankar & Rymon, Talia, 2002. "Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining," Journal of Economic Theory, Elsevier, vol. 104(1), pages 16-47, May.
  16. Vincent P. Crawford, 2007. "Look-ups as the Windows of the Strategic Soul: Studying Cognition via Information Search in Game Experiments," Levine's Bibliography 321307000000000766, UCLA Department of Economics.
  17. Engle-Warnick, J. & Slonim, Robert L., 2006. "Learning to trust in indefinitely repeated games," Games and Economic Behavior, Elsevier, vol. 54(1), pages 95-114, January.
  18. Miguel A. Costa-Gomes & Vincent P. Crawford, 2006. "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study," Levine's Bibliography 321307000000000336, UCLA Department of Economics.
  19. Schaffer, Mark E., 1989. "Are profit-maximisers the best survivors? : A Darwinian model of economic natural selection," Journal of Economic Behavior & Organization, Elsevier, vol. 12(1), pages 29-45, August.
  20. Anders Skrondal & Sophia Rabe-Hesketh, 2007. "Latent Variable Modelling: A Survey," Scandinavian Journal of Statistics, Danish Society for Theoretical Statistics;Finnish Statistical Society;Norwegian Statistical Association;Swedish Statistical Association, vol. 34(4), pages 712-745.
  21. R. D. Theocharis, 1960. "On the Stability of the Cournot Solution on the Oligopoly Problem," Review of Economic Studies, Oxford University Press, vol. 27(2), pages 133-134.
  22. Costa-Gomes, Miguel & Crawford, Vincent P. & Broseta, Bruno, 1998. "Cognition and Behavior in Normal-Form Games: An Experimental Study," University of California at San Diego, Economics Working Paper Series qt1vn4h7x5, Department of Economics, UC San Diego.
  23. Hans-Theo Normann & Brian Wallace, 2012. "The impact of the termination rule on cooperation in a prisoner’s dilemma experiment," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(3), pages 707-718, August.
  24. Reinhard Selten & Michael Mitzkewitz & Gerald R. Uhlich, 1997. "Duopoly Strategies Programmed by Experienced Players," Econometrica, Econometric Society, vol. 65(3), pages 517-556, May.
  25. Antoni Bosch-DomËnech & Nicolaas J. Vriend, 2003. "Imitation of successful behaviour in cournot markets," Economic Journal, Royal Economic Society, vol. 113(487), pages 495-524, 04.
  26. Camerer, Colin & Ho, Teck-Hua, 1997. "Experience-Weighted Attraction Learning in Games: A Unifying Approach," Working Papers 1003, California Institute of Technology, Division of the Humanities and Social Sciences.
  27. Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 2004. "Through Trial and Error to Collusion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 205-224, 02.
  28. Timothy C. Salmon, 2001. "An Evaluation of Econometric Models of Adaptive Learning," Econometrica, Econometric Society, vol. 69(6), pages 1597-1628, November.
  29. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  30. Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2000. "Trial & Error to Collusion - The Discrete Case," Bonn Econ Discussion Papers bgse6_2000, University of Bonn, Germany.
  31. Waltman, Ludo & Kaymak, Uzay, 2008. "Q-learning agents in a Cournot oligopoly model," Journal of Economic Dynamics and Control, Elsevier, vol. 32(10), pages 3275-3293, October.
  32. Milgrom, Paul & Roberts, John, 1991. "Adaptive and sophisticated learning in normal form games," Games and Economic Behavior, Elsevier, vol. 3(1), pages 82-100, February.
  33. Carlos Alós-Ferrer, 2001. "Cournot versus Walras in Dynamic Oligopolies with Memory," Vienna Economics Papers 0110, University of Vienna, Department of Economics.
  34. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
  35. repec:esx:essedp:715 is not listed on IDEAS
  36. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  37. Stahl, Dale O., 1996. "Boundedly Rational Rule Learning in a Guessing Game," Games and Economic Behavior, Elsevier, vol. 16(2), pages 303-330, October.
  38. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
  39. TeckH. Ho & Xin Wang & ColinF. Camerer, 2008. "Individual Differences in EWA Learning with Partial Payoff Information," Economic Journal, Royal Economic Society, vol. 118(525), pages 37-59, 01.
  40. Paul Milgrom & John Roberts, 2010. "Adaptive and Sophisticated Learning in Repeated Normal-Form Games," Levine's Working Paper Archive 418, David K. Levine.
  41. Rassenti, Stephen & Reynolds, Stanley S. & Smith, Vernon L. & Szidarovszky, Ferenc, 2000. "Adaptation and convergence of behavior in repeated experimental Cournot games," Journal of Economic Behavior & Organization, Elsevier, vol. 41(2), pages 117-146, February.
  42. Colin Camerer & Teck-Hua Ho, 1999. "Experience-weighted Attraction Learning in Normal Form Games," Econometrica, Econometric Society, vol. 67(4), pages 827-874, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:wp860. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dipartimento Scienze Economiche, Universita' di Bologna)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.