Does opponents’ experience matter? Experimental evidence from a quantity precommitment game

Chloe Le Coq and Jon Thor Sturluson

Journal of Economic Behavior & Organization, 2012, vol. 84, issue 1, 265-277

Abstract: This paper investigates why subjects in laboratory experiments on quantity precommitment games consistently choose capacities above the Cournot level – the subgame-perfect equilibrium. We argue that this puzzling regularity may be attributed to players’ perceptions of their opponents’ skill or level of rationality. We first show theoretically that it is the case by modelling a two-stage game of capacity investment and pricing with bounded rational players. We then design an experiment in which we use the level of experience as a proxy for the level of rationality and match subjects with different levels of experience. We find significant differences in behavior depending on opponents’ experience; moreover, players facing inexperienced players tend to choose higher capacities than they would otherwise.

Keywords: Experience; Experiment; Oligopoly; Quantity precommitment; Rationality (search for similar items in EconPapers)
JEL-codes: C92 L11 L13 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Do Opponents' Experience Matter? Experimental Evidence from a Quantity Precommitment Game (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:84:y:2012:i:1:p:265-277

DOI: 10.1016/j.jebo.2012.03.015

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