Imitation and the Evolution of Walrasian Behavior: Theoretically Fragile but Behaviorally Robust

Jose Apesteguia (), Steffen Huck, Jörg Oechssler and Simon Weidenholzer

No 461, Working Papers from University of Heidelberg, Department of Economics

Abstract: A well-known result by Vega-Redondo implies that in symmetric Cournot oligopoly, imitation leads to the Walrasian outcome where price equals marginal cost. In this paper we show that this result is not robust to the slightest asymmetry in fixed costs. Instead of obtaining the Walrasian outcome as unique prediction, every outcome where agents choose identical actions will be played some fraction of the time in the long run. We then conduct experiments to check this fragility. We obtain that, contrary to the theoretical prediction, the Walrasian outcome is still a good predictor of behavior.

Keywords: Evolutionary game theory; Stochastic stability; Imita- tion; Cournot markets; Information; Experiments; Simulations (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 D43 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-evo, nep-exp, nep-gth, nep-mic and nep-upt
Date: Written
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Related works:
Working Paper: Imitation and the Evolution of Walrasian Behavior: Theoretically Fragile but Behaviorally Robust (2007)
Working Paper: Imitation and the Evolution of Walrasian Behavior: Theoretically Fragile but Behaviorally Robust (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:awi:wpaper:0461

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