Stability of the Cournot Process - Experimental Evidence

Steffen Huck, Hans-Theo Normann () and Jörg Oechssler

Bonn Econ Discussion Papers from University of Bonn, Germany

Abstract: We report results of experiments designed to test the predictions of the best reply process. In a Cournot oligopoly with four firms, the best reply process should theoretically explode if demand and cost functions are linear. We find, however, no experimental evidence of such instability. Moreover, we find no differences between a market which theoretically should not converge to Nash equilibrium and one which should converge because of inertia. We investigate the power of several learning dynamics to explain this unpredicted stability.

Keywords: best reply process; Cournot oligopoly; learning experiments; imitation (search for similar items in EconPapers)
JEL-codes: C72 C92 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-mic
Date: 2002-01
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Related works:
Working Paper: Stability of the Cournot Process - Experimental Evidence (1997)
Journal Article: Stability of the Cournot process - experimental evidence (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:bon:bonedp:bgse1_2002

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