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

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

No 07-69, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim

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.

New Economics Papers: this item is included in nep-evo, nep-exp and nep-mic
Date: Written
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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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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