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Multiple behavioral rules in Cournot oligopolies


Alós-Ferrer, Carlos; Ritschel, Alexander (2020). Multiple behavioral rules in Cournot oligopolies. Working paper series / Department of Economics 331, University of Zurich.

Abstract

We study intra-individual behavioral heterogeneity in an experimental Cournot oligopoly. Previous empirical results in this setting have demonstrated convergence to competitive outcomes, in agreement with theoretical predictions assuming that players imitate successful opponents. We postulate that players sometimes rely on imitation of successful behavior, and sometimes best reply to the actions of others. Testable predictions are obtained from a model allowing for multiple behavioral rules which accounts for differences in the cognitive nature of the underlying decision processes. Those include non-trivial response time interactions depending on whether the rules share a common prescription (alignment) or not (conflict), a classification which is ex ante observable. The results confirm the hypotheses and support the presence of multiple behavioral rules at the individual level.

Abstract

We study intra-individual behavioral heterogeneity in an experimental Cournot oligopoly. Previous empirical results in this setting have demonstrated convergence to competitive outcomes, in agreement with theoretical predictions assuming that players imitate successful opponents. We postulate that players sometimes rely on imitation of successful behavior, and sometimes best reply to the actions of others. Testable predictions are obtained from a model allowing for multiple behavioral rules which accounts for differences in the cognitive nature of the underlying decision processes. Those include non-trivial response time interactions depending on whether the rules share a common prescription (alignment) or not (conflict), a classification which is ex ante observable. The results confirm the hypotheses and support the presence of multiple behavioral rules at the individual level.

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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, C91, D91
Uncontrolled Keywords:Cournot oligopoly, imitation, best reply, multiple behavioral rules
Language:English
Date:July 2020
Deposited On:30 Jul 2019 14:46
Last Modified:10 Jul 2020 15:14
Series Name:Working paper series / Department of Economics
Number of Pages:33
ISSN:1664-705X
Additional Information:Revised version
OA Status:Green
Official URL:https://www.econ.uzh.ch/en/research/workingpapers.html?paper-id=1010

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