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Information and Learning in Oligopoly: An Experiment

Quaderni DSE Working Paper No. 860

68 Pages Posted: 7 Jan 2013  

Maria Bigoni

University of Bologna - Department of Economics

Margherita Fort

University of Bologna

Multiple version iconThere are 3 versions of this paper

Date Written: January 7, 2013

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 (January 7, 2013). Quaderni DSE Working Paper No. 860. Available at SSRN: https://ssrn.com/abstract=2197199 or http://dx.doi.org/10.2139/ssrn.2197199

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

Margherita Fort

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

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