To commit or not to commit: Endogenous timing in experimental duopoly markets

Steffen Huck, Wieland Müller and Hans-Theo Normann

Experimental from University Library of Munich, Germany

Abstract: In this paper, we experimentally investigate the extended game with action commitment of Hamilton and Slutsky (1990). In their duopoly game, firms can choose their quantities in one of two periods before the market clears. If a firm commits to a quantity in period 1 it does not know whether the other firm also commits early. By waiting until period 2, a firm can observe the other firm's period 1 action. Hamilton and Slutsky predict the emergence of endogenous Stackelberg leadership. Our data, however, does not confirm the theory. While Stackelberg equilibria are extremely rare we often observe endogenous Cournot outcomes and sometimes collusive play. This is partly driven by the fact that endogenous Stackelberg followers learn to behave in a reciprocal fashion over time, i.e., they learn to reward cooperation and to punish exploitation.

Keywords: duoploly; endogenous timing; experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C92 D43 (search for similar items in EconPapers)
Pages: 23 pages
Date: 1999-06-15
New Economics Papers: this item is included in nep-exp and nep-ind
Note: Type of Document - pdf; prepared on IBM PC; to print on PostScript; pages: 23 ; figures: included
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https://econwpa.ub.uni-muenchen.de/econ-wp/exp/papers/9906/9906002.pdf (application/pdf)

Related works:
Journal Article: To Commit or Not to Commit: Endogenous Timing in Experimental Duopoly Markets (2002)
Working Paper: To commit or not to commit: Endogenous timing in experimental duopoly markets (2002)
Working Paper: To commit or not to commit: Endogenous timing in experimental duopoly markets (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpex:9906002

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