Through Trial and Error to Collusion
20 Pages Posted: 6 Apr 2004
In this article we study a very simple trial and error learning process in the context of a Cournot oligopoly. Without any knowledge of the payoff functions players increase, respectively decrease, their quantity as long as this leads to higher profits. We show that despite the absence of any coordination or punishing device this process converges to the joint-profit-maximizing outcome.
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