Information and Learning in Oligopoly: An Experiment

Maria Bigoni and Margherita Fort

No 7125, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: Cournot oligopoly; EWA learning; imitation; information (search for similar items in EconPapers)
JEL-codes: C72 C92 L13 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2013-01
New Economics Papers: this item is included in nep-evo, nep-exp and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Published - revised version published in: Games and Economic Behavior, 2013, 81, 192-214

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Related works:
Journal Article: Information and learning in oligopoly: An experiment (2013)
Working Paper: Information and Learning in Oligopoly: an Experiment (2013)
Working Paper: Information and Learning in Oligopoly: an Experiment (2008)
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