Adaptation and Convergence of Behavior in Repeated Experimental Cournot Games

Posted: 28 Dec 2000

See all articles by Stephen Rassenti

Stephen Rassenti

Economic Science Institute, Chapman University

Stanley S. Reynolds

University of Arizona - Department of Economics

Vernon L. Smith

Chapman University - Economic Science Institute; Chapman University School of Law

Ferenc Szidarovszky

University of Arizona - Department of Systems & Industrial Engineering (SIE)

Abstract

This research examines results from laboratory experiments in which five human subjects participate as sellers in a Cournot oligopoly environment. The central issue is whether repeated play among a group of privately informed subjects will lead to convergence to a unique, static, noncooperative Nash equilibrium. The experiments were designed so that the implications of different hypotheses about adaptation and convergence, such as the best response dynamic and fictitious play, could be distinguished. The results provide, at best, only partial support for the hypothesis that behavior of privately informed subjects will converge to the static Nash equilibrium when play is repeated. Total output averaged over time periods and across experiments is greater than, but still close to, predicted equilibrium total output. However, observed intertemporal variation in total output and heterogeneity in individual choices are inconsistent with convergence to the static Nash equilibrium.

Keywords: Cournot games; Oligopoly; Nash equilibrium; Learning

Suggested Citation

Rassenti, Stephen and Reynolds, Stanley S. and Smith, Vernon L. and Szidarovszky, Ferenc, Adaptation and Convergence of Behavior in Repeated Experimental Cournot Games. Available at SSRN: https://ssrn.com/abstract=251294

Stephen Rassenti (Contact Author)

Economic Science Institute, Chapman University ( email )

One University Drive
Wilkinson Hall 104
Orange, CA 92866
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714-628-2802 (Phone)

Stanley S. Reynolds

University of Arizona - Department of Economics ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States
(520) 621-6251 (Phone)
(520) 626-4623 (Fax)

Vernon L. Smith

Chapman University - Economic Science Institute ( email )

One University Dr.
Orange, CA 92866
United States
714-628-2830 (Phone)

Chapman University School of Law ( email )

One University Drive
Orange, CA 92866-1099
United States

Ferenc Szidarovszky

University of Arizona - Department of Systems & Industrial Engineering (SIE) ( email )

Tucson, AZ
United States
520-621-6557 (Phone)

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