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Through Trial and Error to Collusion

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

International Economic Review, 2004, vol. 45, issue 1, 205-224

Abstract: In this article we study a very simple trial and error learning process in the context of a Cournot oligopoly. Without any knowledge of the payoff functions players increase, respectively decrease, their quantity as long as this leads to higher profits. We show that despite the absence of any coordination or punishing device this process converges to the joint-profit-maximizing outcome. Copyright IERE.

Date: 2004
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International Economic Review is currently edited by Harold L. Cole

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