Oligopolistic quantity competition with bounded rationality and social comparison

Yan Li, Yefen Chen, Biying Shou and Xiaobo Zhao

International Journal of Production Economics, 2019, vol. 211, issue C, 180-196

Abstract: We study sales quantity competition among multiple sellers, through a combination of laboratory experiments and theoretical analyses. We conduct laboratory experiments with a 2×2 design from two dimensions: the procurement cost and the number of sellers. The experimental data eloquently exhibit bell-shaped distributions over all alternatives, with peak values consistently larger than the classical Nash equilibrium predictions. We propose a behavioral model which incorporates the behavioral elements of bounded rationality and social comparison, as well as time trends (the learning process). We derive several useful equilibrium properties of the model. The structural estimations show that the proposed behavioral model can effectively explain the experimental data.

Keywords: Behavioral OR; Quantity competition; Bounded rationality; Quantal response equilibrium; Social comparison (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S092552731930026X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:211:y:2019:i:c:p:180-196

DOI: 10.1016/j.ijpe.2019.01.020

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().