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Firms’ Beliefs and Learning: Models, Identification, and Empirical Evidence

Victor Aguirregabiria () and Jihye Jeon ()
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Jihye Jeon: Boston University

Review of Industrial Organization, 2020, vol. 56, issue 2, No 2, 203-235

Abstract: Abstract This paper reviews recent literature on structural models of oligopoly competition where firms have biased beliefs about the primitives of the model—e.g. demand, costs—or about the strategic behavior of other firms in the market. We describe different structural models that have been proposed to study this phenomenon and examine the approaches that have been used to identify firms’ beliefs. We discuss empirical results in recent studies and show that accounting for firms’ biased beliefs and learning can have important implications on our measures and interpretation of market efficiency.

Keywords: Dynamics; Identification; Learning; Non-equilibrium beliefs; Oligopoly competition; Structural models (search for similar items in EconPapers)
JEL-codes: C57 D81 D83 D84 L13 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Firms' Beliefs and Learning: Models, Identification, and Empirical Evidence (2018) Downloads
Working Paper: Firms' Beliefs and Learning: Models, Identification, and Empirical Evidence (2018) Downloads
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DOI: 10.1007/s11151-019-09722-5

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