To commit or not to commit: Endogenous timing in experimental duopoly markets
In this paper, we experimentally investigate the extended game with action commitment of Hamilton and Slutsky (1990). In their duopoly game, firms can choose their quantities in one of two periods before the market clears. If a firm commits to a quantity in period 1 it does not know whether the other firm also commits early. By waiting until period 2, a firm can observe the other firm's period 1 action. Hamilton and Slutsky predict the emergence of endogenous Stackelberg leadership. Our data, however, does not confirm the theory. While Stackelberg equilibria are extremely rare we often observe endogenous Cournot outcomes and sometimes collusive play. This is partly driven by the fact that endogenous Stackelberg followers learn to behave in a reciprocal fashion over time, i.e., they learn to reward cooperation and to punish exploitation.
|Date of creation:||1999|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.wiwi.hu-berlin.de/
More information through EDIRC
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.:
- Saloner, Garth, 1987. "Cournot duopoly with two production periods," Journal of Economic Theory, Elsevier, vol. 42(1), pages 183-187, June.
- van Damme, E.E.C. & Hurkens, J.P.M., 1996.
"Endogenous Stackelberg Leadership,"
1996-115, Tilburg University, Center for Economic Research.
- van Damme, E.E.C. & Hurkens, J.P.M., 1999. "Endogenous Stackelberg leadership," Other publications TiSEM 83a05fd8-4285-48f3-84ef-3, Tilburg University, School of Economics and Management.
- van Damme, E.E.C. & Hurkens, S., 1998. "Endogenous Stackelberg leadership," Other publications TiSEM fc1a6ca3-d618-4bc5-a115-f, Tilburg University, School of Economics and Management.
- Eric van Damme & Sjaak Hurkens, 1996. "Endogenous Stackelberg leadership," Economics Working Papers 190, Department of Economics and Business, Universitat Pompeu Fabra.
- Ellingsen, Tore, 1995.
"On flexibility in oligopoly,"
Elsevier, vol. 48(1), pages 83-89, April.
- Ellingsen, Tore, 1994. "On Flexibility in Oligopoly," SSE/EFI Working Paper Series in Economics and Finance 21, Stockholm School of Economics.
- Mailath George J., 1993. "Endogenous Sequencing of Firm Decisions," Journal of Economic Theory, Elsevier, vol. 59(1), pages 169-182, February.
- Hans-Theo Normann, 1997. "Endogenous Stackelberg equilibria with incomplete information," Journal of Economics, Springer, vol. 66(2), pages 177-187, June.
- Selten,Reinhard & Mitzkewitz,Michael & Uhlich,Gerald, .
"Duopoly strategies programmed by experienced players,"
Discussion Paper Serie B
106, University of Bonn, Germany.
- Reinhard Selten & Michael Mitzkewitz & Gerald R. Uhlich, 1997. "Duopoly Strategies Programmed by Experienced Players," Econometrica, Econometric Society, vol. 65(3), pages 517-556, May.
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, June.
- Steffen Huck & Wieland Mueller, 1998.
"Perfect versus imperfect observability---An experimental test of Bagwell's result,"
- Huck, Steffen & Muller, Wieland, 2000. "Perfect versus Imperfect Observability--An Experimental Test of Bagwell's Result," Games and Economic Behavior, Elsevier, vol. 31(2), pages 174-190, May.
- Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2001.
"Stackelberg Beats Cournot: On Collusion and Efficiency in Experimental Markets,"
Royal Economic Society, vol. 111(474), pages 749-65, October.
- Huck, Steffen & Müller, Wieland & Normann, Hans-Theo, 1999. "Stackelberg beats Cournot: On collusion and efficiency in experimental markets," SFB 373 Discussion Papers 1999,32, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Matsumura, Toshihiro, 1999. "Quantity-setting oligopoly with endogenous sequencing," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 289-296, February.
- Bagwell, Kyle, 1995.
"Commitment and observability in games,"
Games and Economic Behavior,
Elsevier, vol. 8(2), pages 271-280.
- Simon, Leo K & Stinchcombe, Maxwell B, 1995. "Equilibrium Refinement for Infinite Normal-Form Games," Econometrica, Econometric Society, vol. 63(6), pages 1421-43, November.
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
- Hamilton, J.H. & Slutsky, S.M., 1988.
"Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria,"
88-4, Florida - College of Business Administration.
- Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
- 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.
- Robson, Arthur J, 1990. "Stackelberg and Marshall," American Economic Review, American Economic Association, vol. 80(1), pages 69-82, March.
When requesting a correction, please mention this item's handle: RePEc:zbw:sfb373:199938. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.