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27
Imitation and Belief Learning in an Oligopoly Experiment
, 2000
"... We examine the force of three types of behavioral dynamics in quantity-setting triopoly experiments: (1) mimicking the successful firm, (2) rules based on following the exemplary firm, and (3) rules based on belief learning. Theoretically, these three types of rules lead to the competitive, the coll ..."
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Cited by 37 (3 self)
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We examine the force of three types of behavioral dynamics in quantity-setting triopoly experiments: (1) mimicking the successful firm, (2) rules based on following the exemplary firm, and (3) rules based on belief learning. Theoretically, these three types of rules lead to the competitive, the collusive, and the CournotNash outcome, respectively. In the experiment we employ three information treatments, each of which is hypothesized to be conducive to the force of one of the three dynamic rules. To a large extent, the results are consistent with the hypothesized relationships between treatments, behavioral rules, and outcomes.
Learning in Cournot Oligopoly -- An Experiment
, 1997
"... This experiment was designed to test various learning theories in the context of a Cournot oligopoly. We derive theoretical predictions for the learning theories and test these predictions by varying the information given to subjects. The results show that some subjects imitate successful behavior i ..."
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Cited by 26 (7 self)
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This experiment was designed to test various learning theories in the context of a Cournot oligopoly. We derive theoretical predictions for the learning theories and test these predictions by varying the information given to subjects. The results show that some subjects imitate successful behavior if they have the necessary information, and if they imitate, markets are more competitive. Other subjects follow a best reply process. On the aggregate level we find that more information about demand and cost conditions yields less competitive behavior, while more information about the quantities and profits of other firms yields more competitive behavior.
Does information about competitors’ actions increase or decrease competition in experimental oligopoly markets?
, 1998
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Does Auctioning of Entry Licenses Induce Collusion? An Experimental Study
, 2001
"... We use experiments to examine whether the auctioning of entry rights affects the behavior of market entrants. Standard economic arguments suggest that the license fee paid at the auction will not affect prices since it constitutes a sunk cost. This argument is not uncontested though and this paper ..."
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Cited by 6 (0 self)
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We use experiments to examine whether the auctioning of entry rights affects the behavior of market entrants. Standard economic arguments suggest that the license fee paid at the auction will not affect prices since it constitutes a sunk cost. This argument is not uncontested though and this paper puts it to an experimental test. Our results indicate that an auction of entry licenses may affect prices. The payment of an entry fee increases the probability that the market entrants tacitly coordinate on a collusive price path
The Limited Liability Effect in Experimental Duopoly Markets
, 2003
"... Brander and Lewis (AER, 1986) show that firms with limited liability can use debt to commit to aggressive behavior in Cournot markets. In our duopoly experiments, we find that subjects choose much less debt than predicted by theory. Although subjects try to exploit the strategic advantage of debt, t ..."
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Cited by 2 (0 self)
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Brander and Lewis (AER, 1986) show that firms with limited liability can use debt to commit to aggressive behavior in Cournot markets. In our duopoly experiments, we find that subjects choose much less debt than predicted by theory. Although subjects try to exploit the strategic advantage of debt, they do not (want to) acknowledge possible strategic advantages of opponents’ debt. Replacing quantity with price competition, our data support the theoretical prediction of Showalter (AER, 1995) that demand and cost uncertainty have opposing e¤ects on the strategic choice of debt. However, observed behavior is more in line with collusion than with the subgame perfect equilibrium prediction.
Stability of the Cournot Process -- Experimental Evidence
, 2002
"... We report results of experiments designed to test the predictions of the best reply process. In a Cournot oligopoly with four Þrms, the best reply process should theoretically explode if demand and cost functions are linear. We Þnd, however, no experimental evidence of such instability. Moreover, we ..."
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Cited by 2 (1 self)
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We report results of experiments designed to test the predictions of the best reply process. In a Cournot oligopoly with four Þrms, the best reply process should theoretically explode if demand and cost functions are linear. We Þnd, however, no experimental evidence of such instability. Moreover, we Þnd no differences between a market which theoretically should not converge to Nash equilibrium and one which should converge because of inertia. We investigate the power of several learning dynamics to explain this unpredicted stability.
2003. Bidding at sequential first-price auctions with(out) supply uncertainty: A laboratory analysis
- Unitat de Fonaments de l’Anlisi Econmica (UAB) and Institut d’Anlisi Econmica (CSIC). URL http://pareto.uab.es/wp/2003/55803.pdf. (Cited on
"... We report on a series of experiments that test the effects of an uncertain supply on the formation of bids and prices in sequential first-price auctions with private-independent values and unit-demands. Supply is assumed uncertain when buyers do not know the exact number of units to be sold (i.e., t ..."
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Cited by 2 (0 self)
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We report on a series of experiments that test the effects of an uncertain supply on the formation of bids and prices in sequential first-price auctions with private-independent values and unit-demands. Supply is assumed uncertain when buyers do not know the exact number of units to be sold (i.e., the length of the sequence). Although we observe a non-monotone behavior when supply is certain and an important overbidding, the data qualitatively support our price trend predictions and the risk neutral Nash equilibrium model of bidding for the last stage of a sequence, whether supply is certain or not. Our study shows that behavior in these markets changes significantly with the presence of an uncertain supply, and that it can be explained by assuming that bidders formulate pessimistic beliefs about the occurrence of another stage.
What's Causing Overreaction? An Experimental Investigation of Recency and the Hot Hand Effect
- Journal of Economics
, 2000
"... A substantial body of empirical literature provides evidence for overreaction in markets. Past losers outperform past winners in stock markets as well as in sports markets. Two hypotheses are consistent with this observation. First, the recency hypothesis states that traders overweigh recent informa ..."
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Cited by 2 (0 self)
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A substantial body of empirical literature provides evidence for overreaction in markets. Past losers outperform past winners in stock markets as well as in sports markets. Two hypotheses are consistent with this observation. First, the recency hypothesis states that traders overweigh recent information. Thus, they are too optimistic about winners and too pessimistic about losers. Second, the hot hand hypothesis states that traders try to discover trends in the past record of a firm or a team, and thereby overestimate the autocorrelation in the series. An experimental design allows us to distinguish between these hypotheses. The evidence is consistent with the hot hand hypothesis. Experience slightly reduces the observed phenomenon of overreaction. JEL codes: D84, G12, C91. Key-words: overreaction, recency, hot hand, scoring rule, experiments. Current version: January 2000 ** University of Amsterdam CREED / Department of economics Roetersstraat 11 1018 WB Amsterdam Netherlands ...
Does Auctioning of Entry Licenses affect Consumer Prices?
, 2000
"... On an increasing scale auctions are used to allocate the licenses to operate on markets which are thought not suited for free entry. According to standard economic arguments, the license fees paid at the auction will not affect consumer prices since they constitute a sunk cost. This standard view is ..."
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On an increasing scale auctions are used to allocate the licenses to operate on markets which are thought not suited for free entry. According to standard economic arguments, the license fees paid at the auction will not affect consumer prices since they constitute a sunk cost. This standard view is not uncontested though. In the present paper we experimentally investigate two arguments for a potential upward effect of auctioning on prices: the incorporation of entry fees in prices due to the use of mark-up pricing rules, and the tendency of auctions to select the more collusive firms. Our results indicate that auctioning increases the probability of high prices, and that this is mainly due to the use of mark-up pricing rules. Often also the firms' customers adhere to this line of reasoning. For example, the International 1 Telecommunications Users Group is strongly opposed to auctioning of scarce telecom resources like radio frequencies, numbering space and orbital slots on the grou...

