Information and Learning in Oligopoly: An Experiment

35 Pages Posted: 21 May 2008 Last revised: 7 Dec 2009

See all articles by Maria Bigoni

Maria Bigoni

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

Multiple version iconThere are 3 versions of this paper

Date Written: July 1, 2009

Abstract

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

Bigoni, Maria, Information and Learning in Oligopoly: An Experiment (July 1, 2009). Available at SSRN: https://ssrn.com/abstract=1134750 or http://dx.doi.org/10.2139/ssrn.1134750

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

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