Imitation Dynamics in Oligopoly Games with Heterogeneous Players

Daan Lindeman and Marius I. Ochea ()
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Marius I. Ochea: Université de Cergy-Pontoise, THEMA

No 2018-15, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We investigate the role and performance of imitative behaviour in a class of quantity- setting Cournot games. Within a framework of evolutionary competition between ra- tional, best-response and imitators players we found that the equilibrium stability de- pends on the intensity of the evolutionary pressure and on the stability of the cheapest heuristic. When the cheapest behavioural rule is the stable heuristic (i.e. imitation), the dynamics converge to a situation where most rms use this behavioural rule and all rms produce the Cournot-Nash equilibrium quantity. When the cheapest heuristic is unstable one (i.e. best-response), complicated endogenous uctuations may occur along with the co-existence of heuristics.

Keywords: Competing heuristics; Imitation; Evolutionary dynamics. (search for similar items in EconPapers)
JEL-codes: C72 C73 D43 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-com and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2018-15

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