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Stability of the Cournot Process - Experimental Evidence

  • Steffen Huck

    (Humboldt University)

  • Hans-Theo Normann

    (Humboldt University)

  • Joerg Oechssler

    (Humboldt University)

We report results of a series of experiments designed to test the stability of the best reply process. With linear demand and cost functions, the process is stable if and only if there are less than three firms in the market. However, we find no experimental evidence of such instability in a four firm oligopoly. Moreover, there are no differences between a market which theoretically should not converge to Nash equilibrium and one which should converge because of inertia.

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Paper provided by EconWPA in its series Experimental with number 9707002.

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Date of creation: 22 Jul 1997
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Handle: RePEc:wpa:wuwpex:9707002
Note: Pages: 14 ; figures: included
Contact details of provider: Web page: http://128.118.178.162

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  1. Abbink, Klaus & Abdolkarim Sadrieh, 1995. "RatImage - research Assistance Toolbox for Computer-Aided Human Behavior Experiments," Discussion Paper Serie B 325, University of Bonn, Germany.
  2. Cox, James C. & Walker, Mark, 1998. "Learning to play Cournot duopoly strategies," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 141-161, August.
  3. Fernando Vega-Redondo, 1997. "The Evolution of Walrasian Behavior," Econometrica, Econometric Society, vol. 65(2), pages 375-384, March.
  4. Holt, Charles A, 1985. "An Experimental Test of the Consistent-Conjectures Hypothesis," American Economic Review, American Economic Association, vol. 75(3), pages 314-25, June.
  5. 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.
  6. 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.
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