Information and Learning in Oligopoly: An Experiment
35 Pages Posted: 21 May 2008 Last revised: 7 Dec 2009
Date Written: July 1, 2009
I propose a novel experimental approach to the study of learning in repeated games, complementing the analysis of players' actual choices with data on the information acquisition process they follow. The game played is a repeated Cournot oligopoly, with limited information. The econometrics hinges on a model built upon EWA learning, and simultaneously analyzing data on information gathered and on actions taken by the subjects. Results suggest that learning is a composite process, in which different components coexist. Belief 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 plays a non-negligible role too, as subjects favor strategies that have yielded higher profits in the past.
Keywords: Information, Learning, Imitation, Collusion, Experiment
JEL Classification: L13, C92, C72
Suggested Citation: Suggested Citation