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

Friedman, Daniel and Huck, Steffen and Oprea, Ryan and Weidenholzer, Simon (2015) 'From imitation to collusion: Long-run learning in a low-information environment.' Journal of Economic Theory, 155. 185 - 205. ISSN 0022-0531

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We explore the stability of imitation in a 1200-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 suggest elements for a new theory of how cooperation emerges.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 16 Apr 2015 14:24
Last Modified: 22 Oct 2020 16:15

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