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Multiple behavioral rules in Cournot oligopolies


Alós-Ferrer, Carlos; Ritschel, Alexander (2019). Multiple behavioral rules in Cournot oligopolies. Working paper series / Department of Economics 331, University of Zurich.

Abstract

We show that economic decisions in strategic settings are co-determined by multiple behavioral rules. A simple model of intra-individual behavioral heterogeneity predicts testable differences depending on whether rules share a common prescription (alignment) or not (conflict), a classification which is ex ante observable. The predictions include non-trivial response time interactions reflecting the nature of the underlying processes, hence the model is not an as if explanation. In a laboratory experiment and two replications on Cournot oligopolies, we find direct evidence showing that decisions arise from the interaction between a deliberative myopic best reply rule and a more intuitive imitative rule.

Abstract

We show that economic decisions in strategic settings are co-determined by multiple behavioral rules. A simple model of intra-individual behavioral heterogeneity predicts testable differences depending on whether rules share a common prescription (alignment) or not (conflict), a classification which is ex ante observable. The predictions include non-trivial response time interactions reflecting the nature of the underlying processes, hence the model is not an as if explanation. In a laboratory experiment and two replications on Cournot oligopolies, we find direct evidence showing that decisions arise from the interaction between a deliberative myopic best reply rule and a more intuitive imitative rule.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C72, C92, D03
Uncontrolled Keywords:Multiple behavioral rules, Cournot oligopoly, best reply, imitation, reinforcement
Language:English
Date:July 2019
Deposited On:30 Jul 2019 14:46
Last Modified:01 Oct 2019 11:38
Series Name:Working paper series / Department of Economics
Number of Pages:39
ISSN:1664-705X
OA Status:Green
Official URL:https://www.econ.uzh.ch/static/release/workingpapers.php?id=1010

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