TY - UNPB
T1 - Cournot meets Bayes-Nash
T2 - A Discontinuity in Behavior Infinitely Repeated Duopoly Games
AU - Argenton, Cedric
AU - Ivanova-Stenzel, Radosveta
AU - Müller, Wieland
N1 - TILEC Discussion Paper Nr. 2022-005
PY - 2022/2/15
Y1 - 2022/2/15
N2 - We conduct a series of Cournot duopoly market experiments with a high number of repetitions and fixed matching. Our treatments include markets with (a) complete cost symmetry and complete information, (b) slight cost asymmetry and complete information, and (c) varying cost asymmetries and incomplete information. For the case of complete cost symmetry and complete information, our data confirm the well-known result that duopoly players achieve, on average, partial collusion. However, as soon as any level of cost asymmetry or incomplete information is introduced, observed average individual quantities are remarkably close to the static Bayes-Nash equilibrium predictions.
AB - We conduct a series of Cournot duopoly market experiments with a high number of repetitions and fixed matching. Our treatments include markets with (a) complete cost symmetry and complete information, (b) slight cost asymmetry and complete information, and (c) varying cost asymmetries and incomplete information. For the case of complete cost symmetry and complete information, our data confirm the well-known result that duopoly players achieve, on average, partial collusion. However, as soon as any level of cost asymmetry or incomplete information is introduced, observed average individual quantities are remarkably close to the static Bayes-Nash equilibrium predictions.
KW - cournot
KW - Bayesian game
KW - Bayes-Nash equilibrium
KW - repeated games
KW - collusion
KW - cooperation
KW - experimental economics
M3 - Discussion paper
VL - 2022-005
T3 - TILEC Discussion Paper
BT - Cournot meets Bayes-Nash
PB - TILEC
CY - Tilburg
ER -