Informational path dependency of learning in games: Collusion and competition in Cournot experiments

47 Pages Posted: 17 Oct 2017 Last revised: 19 Oct 2023

See all articles by Peiran Jiao

Peiran Jiao

Maastricht University - Department of Finance

Heinrich H. Nax

ETH Zürich; University of Zurich

Date Written: October 19, 2023

Abstract

People do not only face fixed informational environments in real-world interactions, but they may learn about the nature of the game, about themselves and others while playing repetitions of a game. In order to investigate how human learning behavior adapts in such situations, we conducted lab experiments on Cournot games where new, richer information concerning the underlying repeated interaction became available over time. To do so, we provided --along different informational paths-- more information as the game was repeated. We consider three main learning rules relevant in this setting, reinforcement learning, best-response dynamics and imitation. Our evidence confirms a natural mapping of information contexts onto predominant learning rules. Action and payoff feedback concerning oneself triggers reinforcement learning, action and payoff feedback concerning others triggers imitation, and information about the payoff structure of the game together with action feedback triggers best-response dynamics. Moreover, we identify important path dependencies in learning that have substantial effects in terms of aggregate convergence. In particular, feedback about others leads to imitative dynamics and overshooting of Nash equilibrium that do not revert when structural information is supplied subsequently.

Keywords: Learning, Imitation, Best-Response, Information, Cournot Competition, Heuristics, Cooperation

JEL Classification: C72, C92, D83

Suggested Citation

Jiao, Peiran and Nax, Heinrich H., Informational path dependency of learning in games: Collusion and competition in Cournot experiments (October 19, 2023). Available at SSRN: https://ssrn.com/abstract=3053958 or http://dx.doi.org/10.2139/ssrn.3053958

Peiran Jiao (Contact Author)

Maastricht University - Department of Finance ( email )

Maastricht, 6200 MD
Netherlands

Heinrich H. Nax

ETH Zürich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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

Paper statistics

Downloads
83
Abstract Views
951
Rank
545,239
PlumX Metrics