From imitation to collusion: Long-run learning in a low-information environment

Daniel Friedman, Steffen Huck, Ryan Oprea and Simon Weidenholzer

Discussion Papers, Research Unit: Economics of Change from WZB Berlin Social Science Center

Abstract: We explore the stability of imitation in a 1,200-period experimental Cournot game where subjects do not know the payoff function but see the output quantities and payoffs of each oligopolist after every period. In line with theoretical predictions and previous experimental findings, our oligopolies reach highly competitive levels within 50 periods. However, already after 100 periods quantities start to drop and, eventually fall deep into collusive territory without pausing at the Nash equilibrium. Our results demonstrate how groups of subjects can learn their way out of dysfunctional heuristics, and thus suggest the need for a new theory of how cooperation emerges.

Keywords: Cournot oligopoly; imitation; learning dynamics; cooperation (search for similar items in EconPapers)
JEL-codes: C73 C91 D43 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: From imitation to collusion: Long-run learning in a low-information environment (2015)
Working Paper: From Imitation to Collusion: Long-run Learning in a Low-Information Environment (2012)
Working Paper: From Imitation to Collusion: Long-run Learning in a Low-Information Environment (2012)
Working Paper: From imitation to collusion: Long-run learning in a low-information environment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbeoc:spii2012301r

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