Playing Cournot although they shouldn’t

Miguel Fonseca, Steffen Huck and Hans-Theo Normann

Economic Theory, 2005, vol. 25, issue 3, 669-677

Abstract: In this note, we experimentally investigate the extended game with action commitment in a Cournot duopoly with asymmetric cost. Risk dominance considerations allow to select a unique equilibrium in which the low-cost firm is the Stackelberg leader. The data, however, do not support the theory as simultaneous-move play is modal. Average output choices are in line with the Cournot equilibrium. This suggests that Cournot is a much more robust predictor for competition in markets than theory suggests. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Commitment; Endogenous timing; Experimental economics; Risk dominance; Stackelberg. (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (26)

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DOI: 10.1007/s00199-003-0456-2

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