Learning in Cournot Oligopoly: An Experiment
38 Pages Posted: 25 Dec 1997
Date Written: September 1997
This experiment was designed to test various learning theories in the context of a Cournot oligopoly. We derive theoretical predictions for the learning theories and test these predictions by varying the information given to subjects. The results show that some subjects imitate successful behavior if they have the necessary information; and if they imitate, markets are more competitive. Other subjects follow a best reply process. On the aggregate level we find that more information about demand and cost conditions yields less competitive behavior, while more information about the quantities and profits of other firms yields more competitive behavior.
JEL Classification: L13
Suggested Citation: Suggested Citation