Satisficing and prior-free optimality in price competition: a theoretical and experimental analysis

Werner Güth (), M. Vittoria Levatia () and Matteo Ploner
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M. Vittoria Levatia: Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany
Authors registered in the RePEc Author Service: Maria Vittoria Levati

No 2008-067, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: On a heterogeneous experimental oligopoly market, sellers choose a price, specify a set-valued prior-free conjecture about the others' behavior, and form their own profit-aspiration for each element of their conjecture. We formally define the concepts of satisficing and prior-free optimality and check if seller participants behave in accordance with them. We find that seller participants are satisficers, but fail to be "prior-free" optimal.

Keywords: Satisficing behavior; Bounded rationality; Triopoly (search for similar items in EconPapers)
JEL-codes: C72 C92 D43 (search for similar items in EconPapers)
Date: 2008-09-09
New Economics Papers: this item is included in nep-cbe, nep-com, nep-exp, nep-mic, nep-mkt and nep-upt
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2008-067

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