Convergence in Finite Cournot Oligopoly with Social and Individual Learning

Thomas Vallée () and Murat Yildizoglu ()

Cahiers du GREThA from Groupe de Recherche en Economie Théorique et Appliquée

Abstract: Convergence to Nash equilibrium in Cournot oligopoly is a problem that recurrently arises as a subject of study in economics. The development of evolutionary game theory has provided an equilibrium concept more directly connected with adjustment dynamics and the evolutionary stability of the equilibria of the Cournot game has been studied by several articles. Several articles show that the Walrasian equilibrium is the stable evolutionary solution of the Cournot game. Vriend (2000) proposes to use genetic algorithm for studying learning dynamics in this game and obtains convergence to Cournot equilibrium with individual learning. We show in this article how social learning gives rise to Walras equilibrium and why, in a general setup, individual learning can effectively yield convergence to Cournot instead of Walras equilibrium. We illustrate these general results by computational experiments.

Keywords: Cournot oligopoly; Learning; Evolution; Selection; Evolutionary stability; Nash equilibrium; Genetic algorithms (search for similar items in EconPapers)
JEL-codes: L13 L20 D43 C63 C73 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-com, nep-evo, nep-gth and nep-mic
Date: 2007
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Persistent link: http://EconPapers.repec.org/RePEc:grt:wpegrt:2007-07

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