Learning, Information and Sorting in Market Entry Games: Theory and Evidence

John Duffy and Ed Hopkins

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: Previous data from experiments on market entry games, N-player games where each player faces a choice between entering a market and staying out, appear inconsistent with either mixed or pure Nash equilibria. Here we show that, in this class of game, learning theory predicts sorting, that is, in the long run, agents play a pure strategy equilibrium with some agents permanently in the market, and some permanently out. We conduct experiments with a larger number of repetitions than in previous work in order to test this prediction. We find that when subjects are given minimal information, only after close to 100 periods do subjects begin to approach equilibrium. In contrast, with full information, subjects learn to play a pure strategy equilibrium relatively quickly. However, the information which permits rapid convergence, revelation of the individual play of all opponents, is not predicted to have any effect by existing models of learning.

Pages: 31
Date: 2001-09
New Economics Papers: this item is included in nep-dev, nep-exp and nep-ind
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Learning, Information and Sorting in Market Entry Games: Theory and Evidence (2010)
Journal Article: Learning, information, and sorting in market entry games: theory and evidence (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:78

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