Information and Learning in Oligopoly: An Experiment

68 Pages Posted: 19 Jan 2013

See all articles by Maria Bigoni

Maria Bigoni

University of Bologna - Department of Economics; IZA Institute of Labor Economics

Margherita Fort

University of Bologna; Ifo Institute, CESifo (Center for Economic Studies and Ifo Institute), Ifo Institute; IZA

Multiple version iconThere are 3 versions of this paper

Abstract

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.

Keywords: information, imitation, Cournot oligopoly, EWA learning

JEL Classification: L13, C92, C72

Suggested Citation

Bigoni, Maria and Fort, Margherita, Information and Learning in Oligopoly: An Experiment. IZA Discussion Paper No. 7125, Available at SSRN: https://ssrn.com/abstract=2203275 or http://dx.doi.org/10.2139/ssrn.2203275

Maria Bigoni (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, Bologna 40126
Italy
+390512098134 (Phone)

HOME PAGE: http://https://www.unibo.it/sitoweb/maria.bigoni/en

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Margherita Fort

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Ifo Institute, CESifo (Center for Economic Studies and Ifo Institute), Ifo Institute ( email )

Poschinger Str. 5
Munich
Germany

IZA ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
38
Abstract Views
792
PlumX Metrics