Posted: 2 Sep 2004
In this note, we experimentally investigate the extended game with action commitment in a Cournot duopoly with asymmetric cost. Risk dominance considerations allow to select a unique equilibrium in which the low-cost firm is the Stackelberg leader. The data, however, do not support the theory as simultaneous-move play is modal. Average output choices are in line with the Cournot equilibrium. This suggests that Cournot is a much more robust predictor for competition in markets than theory suggests.
Keywords: Commitment, endogenous timing, experimental economics, risk dominance, Stackelberg
JEL Classification: C72, C92, D43
Suggested Citation: Suggested Citation
Fonseca, Miguel Alexandre and Huck, Steffen and Normann, Hans-Theo, Playing Cournot Although they Shouldn't - Endogenous Timing in Experimental Duopolies with Asymmetric Cost. Economic Theory, Vol. 25, No. 3, pp. 669-677, April 2005. Available at SSRN: https://ssrn.com/abstract=585365