Cost Structures and Nash Play in Repeated Cournot Games

Douglas Davis, Robert Reilly and Bart Wilson

Experimental Economics, 2003, vol. 6, issue 2, 209-226

Abstract: This paper reports an experiment designed to assess the effects of a rotation in the marginal cost curve on convergence in a repeated Cournot triopoly. Increasing the cost curve's slope both reduces the serially-undominated set to the Nash prediction, and increases the peakedness of earnings. We observe higher rates of Nash equilibrium play in the design with the steeper marginal cost schedule, but only when participants are also rematched after each decision. Examination of response patterns suggests that the treatment with a steeper marginal cost curve and with a re-matching of participants across periods induces the selection of Nash Consistent responses. Copyright Kluwer Academic Publishers 2003

Keywords: experimental economics; Cournot competition; serially undominated equilibria (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (20)

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DOI: 10.1023/A:1025361105730

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