Cournot Meets Bayes-Nash: A Discontinuity in Behavior in Finitely Repeated Duopoly Games

Cédric Argenton, Radosveta Ivanova-Stenzel and Wieland Müller
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Cédric Argenton: CentER & TILEC, Tilburg University
Radosveta Ivanova-Stenzel: TU Berlin

No 460, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We conduct a series of Cournot duopoly market experiments with a high number of repetitions and fixed matching. Our treatments include markets with (a) complete cost symmetry and complete information, (b) slight cost asymmetry and complete information, and (c) varying cost asymmetries and incomplete information. For the case of complete cost symmetry and complete information, our data confirm the well-known result that duopoly players achieve, on average, partial collusion. However, as soon as any level of cost asymmetry or incomplete information is introduced, observed average individual quantities are remarkably close to the static Bayes-Nash equilibrium predictions.

Keywords: Cournot; Bayesian game; Bayes-Nash equilibrium; repeated games; collusion; cooperation; experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C92 D43 L13 (search for similar items in EconPapers)
Date: 2023-11-21
New Economics Papers: this item is included in nep-com, nep-exp and nep-gth
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Related works:
Journal Article: Cournot meets Bayes-Nash: A discontinuity in behavior in finitely repeated duopoly games (2024)
Working Paper: Cournot meets Bayes-Nash: A Discontinuity in Behavior Infinitely Repeated Duopoly Games (2022)
Working Paper: Cournot meets Bayes-Nash: A Discontinuity in Behavior Infinitely Repeated Duopoly Games (2022)
Working Paper: Cournot meets Bayes-Nash: A Discontinuity in Behavior Infinitely Repeated Duopoly Games (2022)
Working Paper: Cournot meets Bayes-Nash: A Discontinuity in Behavior Infinitely Repeated Duopoly Games (2022)
Working Paper: Cournot Meets Bayes-Nash: A Discontinuity in Behavior in Finitely Repeated Duopoly Games (2022)
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